Around one in six (15 per cent) savers plan to increase the amount invested in their pension as a direct result of Chancellor George Osborne’s plan to scrap the 55 per cent rate on pension funds due when the saver dies.
That’s according to research from Investec Wealth & Investment (IW&I), which also reveals that three-fifths (60 per cent) of savers think removing the so-called pension death tax will make investing in a pension more attractive.
As a result, there are likely to be a number of changes in the way savers view and manage their pension.
One in four (24 per cent) people in retirement are now planning to keep more money in their pension fund as a result of cutting the so-called death tax. Of these, three quarters (74 per cent) will change their income strategy.
Almost one in ten (nine per cent) said they are more likely to consider investing in a pension than a second property now they can hand down their assets tax-free to future generations.
The survey shows that a further seven per cent said that it would encourage them to start investing in a personal pension. However this figure rises to 20 per cent among 18-24 year olds.
Nick Gartland, senior financial planning director at Investec Wealth & Investment, says: “Calling a day on the ‘death tax’ is a watershed moment for pensions as it enables wealthy baby boomers to pass on their considerable wealth to future generations. Following hot on the heels of the Chancellor’s decision to scrap compulsory annuities, pension savers have never had it so good. The research shows that we’re likely to see more money going into pensions and more of it remaining in the fund during retirement so it can be handed down tax-free.”