55% Death Tax Update (but don’t forget: you can’t take it with you!)

You might have seen that there was good news from the Chancellor, George Osborne, at the Conservative Party Conference earlier in the month. Ahead of the 2015 General Election, Mr Osborne announced that he was scrapping the so-called pension ‘death tax’, which can see 55% of your pension passed to HMRC on the event of your death.

Good news then if, on death, you still have some or all of your pension left, but the real headline from the announcement should be the fact that the cut is expected to impact an extra 320,000 people. Just think of all that hard-earned pension, left unspent!

As we’ve said before, ‘money is just a tool that allows you to do what you want in life’, it is not, in and of itself, an instant solution or remedy: merely the enabler that allows your lifestyle.

That is why lifestyle financial planning is so important. Firstly, from a conservative point of view, you will want to make sure that you have enough money in retirement to do everything that you want to do – and to cover purchases that might arise, such as replacing your car, for example.

But once this has been done, and you’re comfortable with the pension or other income you will receive in retirement, it’s time to make sure that you are living the lifestyle that you always wanted: doing all of those things that you have been saving up for for such a long time. In short: spending some of your money!

Of course, with contingencies in place, and the unexpected events that are likely to crop up, you may well end up leaving some pension in an inheritance, which makes the Chancellor’s pension ‘death tax’ cut a nice boost to your family. But, more importantly, it’s a reminder that we can’t take our savings with us, and that proper lifestyle financial planning can help us to make sure we spend them on what we always intended to, when we started to save!