The Autumn Budget contained the following key announcements affecting occupational pension schemes:
- Taxation of death benefits – from 6 April 2027, the majority of death benefits paid from registered pension schemes (whether DB or DC) will form part of the deceased member’s estate for inheritance tax (IHT) purposes. This includes lump sums which are currently outside IHT because they are paid to a beneficiary chosen by trustees using their discretion. The main exception will be a dependant’s scheme pension (i.e. pensions paid to a dependant such as a spouse or child). Schemes will be responsible for reporting and paying any IHT due. The government is consulting on the proposals until 22 January 2025.
- National Insurance (NI) contributions – from 6 April 2025, the rate of employer NI contributions will be increased from 13.8% to 15%. NI will be payable by employers on annual earnings above £5,000, instead of £9,100. However, the rumoured extension of employer NI contributions to employer pension contributions did not materialise.
- Scheme administrators – from 6 April 2026, scheme administrators (for tax purposes) of registered pension schemes will be required to be UK resident.
- Overseas transfers – from 30 October 2024, the exclusion from the overseas transfer charge for transfers to qualifying recognised overseas pension schemes in the EEA or Gibraltar will be removed.
- Mineworkers Pension Scheme – the Scheme’s Investment Reserve Fund will be transferred to the Scheme’s trustees to be paid out as additional pension to Scheme members. The government will also take forward a review of the Scheme’s existing surplus sharing arrangements.
We will publish a fuller update setting out more details of the measures and their implications for trustees and employers shortly.
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