Nearly half (47 per cent) of Brits have expressed concern about the government's plans to bring pensions into the scope of inheritance tax, according to research by PensionBee.
As part of her Autumn Budget, Chancellor, Rachel Reeves, announced plans to apply inheritance tax to private pensions, alongside plans to hike employer's National Insurance contributions.
Yet whilst industry experts broadly welcomed the omission of any "drastic" pension tax changes in the Budget, PensionBee's research showed just one in five respondents feel positive about the upcoming change, which is set to take effect in 2027.
As a result, nearly a third (29 per cent) of respondents said they are looking to explore alternative methods to pass on wealth, having previously viewed their pensions as a tax-efficient way to leave money for their loved ones.
Plans to increase employer National Insurance contributions from 13.8 per cent to 15 per cent also appeared to be divisive.
Just under two-thirds (65 per cent) of savers were either unsure about how this would affect them or concerned that it could reduce future wage increases or pension contributions from their employer.
However, over a quarter (28 per cent) felt the change would not impact their pay.
The research found that most (44 per cent) respondents feel the budget has not affected their confidence, but a significant proportion (29 per cent) now feel less assured.
PensionBee director of public affairs, Becky O'Connor, said that following a slight boost in pension confidence after Labour's victory in the recent General Election, it's clear this "optimism is waning."
"The Chancellor's decision to bring private pensions into the inheritance tax fold has been met with opposition from savers, many of whom viewed this as an important feature of pension saving.
"While it's worth noting that an unused defined contribution pension can still be left to a spouse and not be subject to inheritance tax, this policy shift will be a significant disappointment for those relying on pensions to pass on wealth to their children or grandchildren.
"This change is likely to prompt wealthier savers to consider how they manage their pension in retirement, and may mean they explore alternative investment options, which could lead to broader shifts in spending and investment behaviour among retirees."
Industry experts have also raised concerns around how the IHT changes will work in practice, arguing that further clarifications and streamlining are needed to avoid a "bureaucratic nightmare for grieving families".
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