The Chancellor of the Exchequer, Rachel Reeves MP, has presented her Autumn Budget 2024 to Parliament.
The most significant change for occupational pension schemes is the announcement that most unused pension funds and death benefits payable from a pension will be brought into a person’s estate for inheritance tax purposes from 6 April 2027. Currently, most lump sum death benefits are not chargeable to inheritance tax.
The government has published a technical consultation on the processes required to implement this change and has said it will carry out a further technical consultation on draft legislation in 2025. The initial consultation closes on 22 January 2025.
Other points to note in the Budget from a pensions perspective include the following:
- State Pension triple lock: The government will maintain the State Pension triple lock for the duration of this Parliament. As a result, the basic and new State Pension will increase by 4.1% in 2025-26, in line with earnings growth.
- Reducing tax-free overseas transfers of tax relieved UK pensions: The government will remove the exclusion from the Overseas Transfer Charge for transfers to Qualifying Recognised Overseas Pension Schemes in the European Economic Area (EEA) or Gibraltar from 30 October 2024 to address the risk of individuals receiving double tax-free allowances.
- Requirements for European Economic Area Overseas Pension Schemes: The government will bring in line the conditions of Overseas Pension Schemes (OPS) and Recognised Overseas Pension Schemes (ROPS) established in the EEA with OPS and ROPS established in the rest of the world from 6 April 2025.
- UK resident pension scheme administrators: The government will require scheme administrators of registered pension schemes to be UK resident from 6 April 2026.
- Mineworkers’ Pension Scheme: The government will transfer the Investment Reserve Fund in the Mineworkers’ Pension Scheme to the scheme’s trustees. This will be paid out as an additional pension to members of the scheme. The government will also take forward a review of the existing surplus sharing arrangements.
For more information, please speak to your usual Linklaters contact.
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