So good morning to everyone, and thank you for joining us at our webinar on the proposed changes to inheritance tax. I'm Jill Ampleford, and I'm a scheme actuary and Head of CUT Trustee Consulting at LCP. Now, in that role, I'll make sure that LCP helps our clients and contacts stay on top of important issues such as the proposed change in tax that we're talking about today. I'm delighted to be joined by Steve Webb, who I'm sure many of you know already, but Steve has been a partner at LCP for nearly five years, having previously been pensions Minister. He specializes in looking at the impacts of public policy on individual pensioners and savers and in explaining complex pensions issues in plain language, which I think, as we'll hear today, is very much a helpful skill when we're talking about inheritance tax. It's also great to have James Howell Manning with us today. James is a senior consultant from the independent financial advice firm at WPS Advisory. James spends his time advising individuals on a daily basis, and he's here to provide some insight on how he's been seeing members react and adapt to these changes. And last but not least, we will hear from LCPS Alistair Mays, now Alistair Advisors, both trustees and sponsors and is one of our experts on pensions tax. In this role, he's been working closely with HMRC with whom he's already had a lot of discussion on the proposals we are talking about today. So that's us. And of course, we are joined by all our listeners and we've been delighted to see so much interest in today's webinar and in in this topic more generally. And we're conscious there's a lot of different perspectives here, whether that's focusing on DB or DC or the Trustee or the sponsor point of view. And so we're very much going to cover all perspectives as we go through today. Now, before we dive into our content, let me just briefly talk you through what you can see on the portal in front of you. Hopefully you should see the slides and the videos of us as speakers. There's also a box showing our contact details, so you can follow up with any of us afterwards. Do you look out for the resources box where we've looked to include some materials we thought you'd find helpful? And of course, the future resource will be a recording of this webinar itself, which we will record and e-mail out to you in the coming days. Do feel free to watch again or indeed share with anyone else that you think might be interested. And importantly, also look out for the Q and A box. I see some of you have been using it already, but we are keen to hear from you and, you know, make sure we address your questions. I'll be keeping an eye on these and look to cover as many questions as I can sort of throughout the session. But if we don't get to you, fear not, we will reach out directly afterwards to make sure everything, everything is is, is answered. So onto our agenda, which is shown on this page as a brief overview. Steve is going to kick off in a minute by going through what is proposed and how it's intended to work in practice. He'll now hand over to James. He'll give his perspectives on how individuals might be thinking about these changes. And Alistair will then then come on and share his thoughts on what actions trustees and sponsors might take. So with that, to set the scene over to you, Steve. Thank you very much, Jill, and good morning, everybody. Great that there's so much interest in this topic. And with the government consultation closing next week, we hope that some of you will be sufficiently inspired or, or even enraged, who knows, to want to feed in your views while the government is still thinking through exactly what's planned. But we thought before we went any further, we'd make sure that everyone was clear what is proposed in in the measures announced in the budget. So the context is that there was a perception in government that pensions were being used by people not simply to provide for income in retirement, but as a kind of inheritance tax loophole. So people might have an ISA and ADC pension and they would raid their ISA and try and protect their pension because in the event of their death, the pension pots with pensions balance would be exempt from inheritance tax. And that the government took the view that was particularly acute in the light of pension freedoms in 2015, that because people could put money in ADC pension and not turn it into an annuity, it simply became a pot where you could save money outside the inheritance tax system. So in her budget speech in never 2024, Rachel Reeves said that they plan to quote close this loophole. And specifically she used the phrase bring inherited pensions into inheritance tax from April 2027. And you may wonder, why wait so long? We keep hearing the government, short of money, why aren't they doing it more quickly? And I understand that the main reason is that I, the HMRC, want to make inheritance tax digital. So at the moment it's quite a paper based process. Certainly at their end they want to make it digital for reasons I'll explain and they think April 2027 is a realistic timetable. So the good news is that gives us time to feedback and try and hone these proposals. On the day the government launched a 12 week consultation, which as I say closes next week. And we've put a link to that consultation in the resources section of the dashboard that you can see and it fleshes out slightly more what's proposed. So from April the 6th 2027, most unused pension funds and death benefits will be included in the value of a person's estate for IHD purposes and pension scheme administrators note pension scheme administrators will be liable for reporting and paying IHT due on pensions to HMRC. So there's a couple of things that we want to flesh out there about what's in scope. So what is it that is actually going to be taxed? And then what does this mean administratively for members and for schemes? So in terms of just the big picture, what's the impact of all of this? Well, 38 1/2 thousand estates which are already expected to pay IHD will pay more. So they're already over the limits. But this will add to the size of the estate and the average bill in those cases expected to rise from 169,000 to 203,000. So the majority of those impacted would actually already be paying IHD on the estate, but will pay more. And just over 10,000 estates will be brought into the scope of IHD. That's around 1 1/2 percent of annual deaths. So the government would be keen to stress, I think that still the vast majority of the states, even after this change takes place, would not pay IHT in terms of revenue. It's worth looking, it takes a bit of time to, to, to, to gear up because obviously there's a lag between, you know, the death, the death being reported, the IST being paid and so on. So the government thinks just over half a billion in the first year and about one and a third billion in the second year. Worth saying that that's more than double the, the steady state revenue, more than double the, the farmers, more than double the IHD changes to agricultural assets and so on. And yet this measure has had very little attention. And we think it it is a more so it's a big measure that revenue is roughly what they raised by restricting winter fuel payments to those on pension credit. So in terms of government finances, it's worth saying this is serious money and therefore we don't think they will just change their mind. There is scope we think for changing the proposal, but anything that makes a serious dent in the money, we don't think that they will be particularly receptive to. So what is it that is actually going to be in scope now, the first batch of bullet points here in all of this language is from the consultation. I've cut and pasted it from a long list in the appendix for consultation is essentially unused pots. So unused drawdown funds flex the access drawdown funds. It's that's kind of what we thought it was always going to be about. It is this kind of lump sums left untouched in DC pots of various sorts, including, you know, left to left to dependence, left to nominees, left to successors and all these variations. But it's essentially DC pots left behind. That's the first batch. The second, perhaps slightly more surprisingly, is lump sum death benefits. So an obvious case might be a death in service DB benefit or death in service lump sum payment from a from ADC pension. Anything kind of lump sumy that would otherwise be passed on free of inheritance tax will be will be brought in and will qualify some of this in a moment. And likewise at the bottom trivial commutation lump sums as well. So there's a mix of of pots simply undo drawn down pots and lump sum death benefits. Now maybe that seems clear and certainly if we look at what's out of scope and it looks pretty clear, isn't it? So they are not going to levy IHT on things like a widow's pension from ADB scheme. So you die, your widow widower gets a pension or indeed dependent child gets a pension. Those things are not in scope. That seems pretty clear. And then this wording is directly from the consultation. Out of scope is life policy products purchased with pension funds or alongside them as part of a pension package offered by an employer. Now by the end of this, you may share our view that it really isn't absolutely clear what's in and out when it comes to life policies and death benefits. So let me just give you one example. So accepted group life policies, you hear this phrase, what is it? It's a life assurance policy set up under discretionary trust for death in service. So these are particularly common perhaps for for higher earners and they were popular under the old lifetime allowance regime as they didn't count, you didn't use up any lifetime allowance. So if you got a payment from one of these accepted group life policies, it didn't count which lifetime allowance. So they were becoming more popular and there wasn't any income tax on them either, provided the payment was discretionary. So this strange rule about if the trustees, you can tell who the trustees who you'd like to have the money. But if they reserve the right to pay it to somebody else, it wasn't subject to income tax and, and until now has been excluded from the estate for inheritance tax purposes. But unclear to us at the moment whether these will continue to be exempt if they're not part of a pension package, if they're freestanding in some way. And Alistair will deal with that point in more detail. But we just want to give you a sense that although the language in the consultation appears to be clear, when you then bump against the complexity of individual arrangements, it's, it's still not absolutely clear to us what's in and what's out. We will give you our best, dear, but sometimes HMRC are not actually that clear either. Now I'm just turn to the practicalities. Now, I've broken all the rules of PowerPoint here by cramming far too many words on this slide, but I've done it for a reason, which is I want to show you the complexity of the administrative process that members of schemes and administrators of pension schemes will have to go through in the event of a death. And one thing I want to stress is that the people affected are not just going to be those who end up with an IHT bill or their estate. There will be many people who will have to go through all of this process, even at the end of it. The answer turns out to be that there's no IHT due, and I'll explain that point, but I think it says the burden on P 50,000 or so estates where more IHT will be payable as a result of the change. So the first thing that happens, the personal representative, so the person sorting out the estate tells relevant pension scheme administrators of the death and requests relevant information. So immediately the personal representative has to know which pensions the deceased was a member of. Now in a perfect world they have access to all paperwork, the contact details, the policy numbers and all the rest of it. In the real world none of those things may be the case. So they may have to go on a bit of a hunt to try and find. So they might see a bank statement with a, with a payment in it or a, or a withdrawal from a lump sum, you know, from ADC pot. And is there enough on the bank statement to enable them to identify the provider and, and to get in touch with them? So they have to find all of the relevant pension schemes. The pension schemes then have to tell them first of all, is there any money left? Is there any death benefit payable? Crucially, who the beneficiaries are because for example, IHD is not due between spouses. So if as a husband to a wife, wife to a husband, civil partners, IHC isn't due. So it matters who not just how much is left, but who the beneficiaries are, how much is due to each. That could be an apportionment between each and the amount of lump sum allowance for the perhaps small number of cases where they exceed this new lifetime limit. Worth saying again that sometimes this is all pretty straightforward. You know, a person dies, they, they leave surviving spouse or they have no spouse but they have adult children and everybody agrees who's the money's due to. But what when that doesn't happen? And I have to talk a bit more about the practicalities of trustees deciding who this money goes to, because the person administered in this state needs to know that information before they can proceed. So the personal representative has to wait until they've got all of this information from all of the schemes. So worth saying that they are in a sense in thrall to the worst performing administrator. They take all of that information, all the other information they've gathered on the House, on jewelry, on ices, all the rest of it, put it in this new online calculator which doesn't currently exist. And then if tax is due, the calculator then tells the the personal representative for each pension scheme how much of the nil rate band. So you get just under 1/3 of a million of nil rate band on inheritance tax. How that's carved up between the different pension schemes. That information has to be then sent by the representative to this each scheme in as a sub statement. So each one gets told you can apply a certain size of nil rate band and then inheritance tax on top of that. The scheme administrator then reports all of this to HMRC via accounting for tax. HMRC tell them how much IHT is due and in theory they've got six months to pay the IHT from the date of death. And of course, you know, how long is it before the scheme even hears this information? How long does it take to give the information back to the personal representative? How does it then take the representative to come back to the scheme with the information? Is all that doable within six months? Often not we think, and of course the scheme has got to give, if it's ADC scheme as we understand it, a pot value on the date of death. Well, of course there was no significance to the scheme of the date of death because they didn't know about it at the time. So they just carried on running the scheme. Will they even have readily available a pot value, a date of death? So the scheme administrator pays the IHT plus any interest and penalties and then releases the scheme benefits net of IHTT. Meanwhile the personal representative is doing their own IHT payment for the bit of the estate that is not pension, so they pay non IHT pension when all of that is settled. So I all the IHT bills have been paid then and only then the personal representative can apply for probate. So you kind of got a sense from all of this that it's going to be huge hassle. And at the end of it, the answer might be no, there's no IHT due. But you won't know until you've contacted as a personal representative all the pension schemes of which the person was a member, including finding out about death benefits. Only when you've gone through all that process might you discover that in fact, the answer is not, but you will still have to go through the process. So I hope, Jill, that gives a flavor for just some of the things we're concerned about, about the practicalities. And with that, I'll pass back to you. I can see questions have been flooding in, but I'll pass back to you. Yes, thanks for that Steve. And yes, you, you as you've been talking, there's been lots of questions coming in which which is great. Do keep them, them coming. I think let's take a few of them now before we then hand on to to James. I'll kick off with what's probably very hopefully a straightforward one. Your earlier numbers, so the 38 1/2 thousand States and the 10 1/2 thousands of states, are those annual figures or are they sort of in total figures? Those are annual figures. So roughly speaking, so the 10,000 was was 1 1/2 percent of estates per year. That that was the rough figure. So that gives you a sense of roughly the number of estates that we're talking about. Off the top of my head, I'm going to say 600,000 each. It does. It'll go up as the population ages, but those are annual figures and the revenue figures are annual figures. Yeah, now helpful. There's a lot of concern, I'd say, about these changes and what that might do for sort of incentivizing people putting money in pensions. There's been a few questions through particularly about sort of death and service. And one here is sort of how can a lump sum death benefit such as a multiple of pay, which you know is a common sort of lump sum death and service benefit that you might get in either a defined contribution or defined benefit arrangement. How can that be in scope for inheritance tax when essentially it's not been an asset that the members ever had access to? And I think as thank you for that, Joe, I think as Alistair will come on to, we do think that it is slightly odd, frankly, I'll put that gently and diplomatically, slightly odd. If the point really was about trying to avoid people using DC pension pots as a tax shelter suddenly then taxing people possibly on debt and service benefits, you know, just imagine, I don't know, presumably this covers public sector schemes as well. So you know, a firefighter and something awful's happened and the the widow or widow it gets this lump sum but they don't navigate chunk attacks taken off it and very hard to see why that should be the case. So we hope that this is something they will look at as part of the consultation. OK. And just to wrap up before I pass on to James, just a few questions about the consultation itself. Firstly, you know what is the pensions and finance sort of industry doing to you know really strongly respond in this consultation? And related to that, I mean, if if you were a guessing, guessing man, Steve, do you think we're going to see much if any change when the consultation responses are processed? My sense is that if you, you know, if we collectively could come back to them and say, OK, we get that you don't want DC pots used as avoidance vehicles. We get that you want 1 1/2 billion pounds a year, here's a better way of doing it. I think they would be open to that. But if we simply say, well, we don't like it and you shouldn't do it, I don't think we'll get very far. So the one thing that's been suggested is some sort of de minimus, for example. So, you know, we know lots of DC pots are small, so you could draw a line somewhere where frankly there's not much IHT going to be paid anyway as a percentage of the pot, but but you've still got all of a hassle for a big pot As for a small pot. So whether you could draw a line so that schemes could simply go back and say no, you don't have to worry about this. It's below, it's below the limit. You don't have to wait for us to give you information we can reply to immediately and tell you, you don't need to worry about it. You know, so that kind of thing could help things like freeing up funeral money. There could be some special rule for that because obviously if any of this is to pay for funerals and stuff, it doesn't happen for eight months. That's pretty grim. So a lot of the practicalities and and particularly the treatment of death benefits, I think we we hope for some change on, but the basic concept would be surprising if they changed. Thanks for that, Steve. As I say, do keep the questions coming through. Some of the other questions we will hopefully have some time at the end to come back to or indeed James and Alistair will be sort of effectively covering I think some of the answers as they go through. So I don't want to spoil their Thunder as it were. So James, do you now want to talk us through the individual's perspective, please? Certainly. Good morning, everyone. Obviously, I'm here to talk a little bit about how individuals might respond and maybe what they've got on their minds at the moment. Just a very brief little bit of background about us. So we have a background advice on defined benefit pensions, but we're now helping quite a lot of ongoing clients with defined contribution funds where legacy has often been a key consideration. Of those ongoing clients, when defined contribution pensions, approximately 50% are still in the accumulation phase and 50% are now in drawdown or retired. So some of the key considerations here are potential double taxation of assets. I'm going to talk a little bit about the residents no rate band, the potential reduction for larger estates and some additional complications that can occur particularly for couples that are not married or in a civil partnership or with dependent children. So in terms of further considerations and practical implications, we talked a little bit about this already, but you know, death benefits from registered pension schemes may also be subject to inheritance tax, both for defined contribution and defined benefit schemes, excluding dependence pensions and benefits paid to a charity. But often we find that individuals are not necessarily even aware of this. Inheritance tax due on pensions, as we've said, will be taken from the fund and paid by scheme administrators, so this increases the risk of delays. Inheritance tax must be paid within six months of death, as Steve mentioned, or become subject to interest charges by HMRC. Trustees would also need more information before paying death benefits as we've seen and that may cause delays in payment benefits potentially causing difficulty particularly for vulnerable beneficiaries, especially if there aren't a lot of resources that maybe were were shared even between husband and wife, the nil rate band. So looking at the calculation for how this is apportioned between assets and pensions could be quite complex, particularly if there are a number of different assets and pension schemes held. And many individuals, you know, may simply not Realise the need or the benefit of taking some financial advice on things like this. So in terms of taxation, just a quick reminder of the allowances that we're talking about here for inheritance tax. So we've got a nil rate band of £325,000 per individual. We've got a residence nil rate band of £175,000 per individual, so potentially we can be talking about up to £1,000,000 for a household with the main residence, provided that the property is due to pass two descendants. Now inheritance tax may often be considered a form of double taxation as obviously a lot of these assets that have been built up within an estate may have already been subject to income tax or indeed capital gains tax. Assessing pensions or assets before death may not always help mitigate double taxation. If a member accesses pension benefits to make large gifts but then passes away within seven years, they may have paid income tax at their highest marginal rate, which could potentially be 45% or even 60% in some cases. But the assets could still be counted for inheritance tax as well. So the overall income and inheritance tax treatment of pensions on death, particularly before age 75 May for some beneficiaries, you know, it may be more favorable than accessing those pensions in advance of death. For gifts, the residents no rate bands. This is something that is reduced for estates over £2,000,000. So with the addition of pension values from April 2027, this is likely to become more common. For example, it's not unusual to see property prices in excess of £1,000,000 in the southeast, so this doesn't leave much additional headroom. The other point here is that the nil rate band and residence nil rate band are only transferable for those that are in civil partnership or married. So the tax implications are likely to be certainly more complex for those who are not potentially higher. So in terms of potential advice options and what people are thinking here, you know, potentially changing pension withdrawals or altering the order in which investments and pensions are accessed in retirement is what's going to be on some people's minds. This might range from slight changes to amounts withdrawn to making large withdrawals and gifts to family. For example, to help someone with a property purchase, gifting of surplus funds, utilizing gift allowances and exemptions to help mitigate inheritance tax and in some cases trust planning. So to help direct assets appropriately and keep keep them outside of the estate if possible. Those running pension schemes may want to consider the differences between registered and accepted group group life schemes as Steve was referring to. It's also worth mentioning, you know, we are appointed to advise beneficiaries of group life schemes in these situations. And obviously context all of this for the individual is that they're quite possibly in a vulnerable situation because you know, their loved one or somebody close to them has just passed away. So all of this complication does just add to that mix. I'll pass back to Jill there. Have we got any sort of questions on that side of things? I think you may be muted, Jill. Thank you very much Steve. Always always 1 isn't there. I've got 2 mute buttons. I've unmuted one but not the other. But anyway, bear with me. I, I was saying, yes, there's various questions coming through, James. Some of them are around what you're seeing from individuals already. Are you finding that there's good awareness of what these inheritance tax changes might mean? And and indeed, are you seeing any early actions being taken by the people that you're working with as as a result? There's definitely some awareness, I think particularly if you've got individuals where, you know, legacy and passing on assets has been a priority for some time that often aware of the announcements and these potential changes coming up. The nuances can often be not so clear, but it's certainly something where people are asking a lot of questions. Some individuals are, you know, in a hurry to try and look at these things and make changes to their, to their plans. That's not easy. And particularly at the moment we're in a, you know, a consultation process. We've got to be very careful that we only act on facts and not on, on what's being discussed just yet. It's got to be clear what will actually happen, but it's certainly something that's on a lot of people's minds, yes. Thanks for that. And relates to that, I mean, there's one question around, have you really been seeing many people use DC funds as a way of avoiding inheritance tax? I mean, you know, it's, there's a sense, I suppose that, you know, people have been using funds in a way the government really doesn't want them to. But are you, have you seen that in practice or is this really a bit of a sledgehammer to cracking up? I think it's, it's certainly fair to say people have this in mind. You know, people are aware of the differences in tax treatment. Not everybody clearly, but particularly if somebody's got a, a larger pension fund, they're likely to be mindful of how it's how it's taxed. Does that mean people have been putting extra amounts of money into pensions specifically for that reason? I'd say there's going to be fewer of those people around. But certainly if people have built up pensions over a lifetime, but let's say they've also built up other assets, ISIS, as Steve mentioned, you know, other things such as property and they get to retirement and they start to think, well, which do I draw from first? They're going to consider tax implications. They are going to have some bearing on on what they draw from, but it's more likely to be a a mixture of the approaches, you know, drawing from different elements. Thank you. A few questions around and I guess people are thinking about is there any way we can simplify, you know, the complicated process that Steve went through with us? Does it all become a lot more easy if everything is effectively going to the spas? Does it become a lot easier? It's, it's perhaps a simpler outcome, but I think as Steve mentioned, the process is nonetheless complicated. You know, bluntly, not every spouse knows where their, their partners pensions were. You know, that that's not always the case. Some people keep really nice clear records, they share those with their family. Other people don't do either of those things. You know, they, they might not be aware of these things. So that the starting point, as Steve mentioned, is an individual's got to go around and work out what is there in the 1st place. Then they've got to go through this process to establish whether inheritance tax is payable. It might all result in note inheritance tax being payable, but all of that could amount to a delay. And as we said, you know, who's going to be in this situation, It's probably going to be the family member that actually they've just lost somebody they love. And it's, it's, it's a difficult time. So extra complication bluntly, it's it's not necessarily going to be helpful in that way. OK. And last question before I hand over to Alistair a number of people noting how much more work there's going to be for the personal representative, you know, very much again, as as Steve stepped us through, do you think we'll see a new industry being created to deal with this? Because, you know, it's hard to see how, you know, many people would, would really fare with such a such a process. You know, I don't know, is that a new opportunity for WPF? Who knows? It's a. Very interesting question. I mean, you know, we, we try our best to work alongside, you know, solicitors, administrators, everybody who is likely to be involved in this. It is an interesting question because as you say, it's, you know, it's, it's not always an easy process already as, as the rules stand currently, it sounds certainly like it's likely to get more complex. And I think, yeah, there's, there's potential there that it could be a service in its health, you know, to help people go through this process. You know, I mentioned earlier, we're in, in some cases we are appointed by schemes to help beneficiaries. So certainly it's going to make that process a little bit more involved and and there's going to be some extra steps and probably it's going to take a little bit longer as you say. Great. Thank you James and Alistair, I love the simplicity of this title. What can you do? Hopefully you're going to leave us with some some actions that people are listening in may be able to take forward. Brilliant. Thanks, Joe. Good morning to everybody. Yes, so Steve set out what's happening and explained some of the problems that we anticipate with the pros proposed news process. And James explained the wider context of inheritance tax and how individuals might respond. What I'll now step you through as employers and trustees is what you can be doing both now and as the new regime gets closer to implementation. So what I'll do is start with communication, then talk specifically about actions for employers and then move on to to actions for trustees now. And Steve mentioned earlier sort of we've got two years before the the new regime comes into force. And so and that maybe I'm clutching at straws here, but I think so that is helpful. It does give people more time to respond and get ready, but those two years will go very quickly and so there is work that needs to be done now to start preparing. In terms of communication to employees and members, I think it's sort of a minimum compliance approach is to make sure that you have a look at your existing member communications and identify where they say the benefits will be payable tax free. I think the idea that death lump sum benefits in particular are payable tax free without inheritance tax is something that's so ingrained in the pension psyche that I think what's certainly where I've looked, there are lots and lots of references to benefits being paid tax free. And so as we get closer to those references will need to be removed and updated. And I think it's also very important that you warn members of this change. It is a fundamental change that's happening. And so it makes sense to put an item in your newsletter this year to explain to people that there is change on the way. It's probably too early to go into lots of detail, but it does make sense to warn people that things are happening. But I think it's also important to say that sort of we shouldn't view everything as being negative. I think there is an opportunity for engagement with employees and members as a result of these changes. And I no doubt you'll sort of many of you would have had similar experience to me where sort of a member has died and you've got the question of who do you pay any death benefits to? And the problem is either they haven't completed the nomination form or they did. But since then a significant life event has happened. And so I think one of the opportunities we have here is to use all of the press coverage that I imagine will start to build up in the coming months and in remind employees and members how important it is to complete those nomination forms and update them when circumstances change. So I think that's hopefully something that might be good coming from all of this. And then as it all becomes clearer, I think it's really important that you provide a high level explanation of the changes to your employees and members, help them understand what's happening because there's a lot to consider here. And also, I think sort of a simple step that everybody can do is to make a list of all of their savings, their investments, and their pensions so that they're all readily to hand so that if the worst should happen, their dependents can very easily get notify all of the organizations that need to be notified. So they make sure that they they get what's due to them and they do so promptly. I think it's also helpful to direct people to sources of support. And we've talked about how complicated all of this is. And so obviously organizations like Money Helper and Citizens Advice are people that you can point your employees and members towards to, to get support if they need it. In terms of best practice, I think you'll probably go a bit further. And particularly if you've got a lot of medium income or higher net worth individuals as either employees or members, then what you might encourage them to do is not just create a list of what all of their assets are, but also place a value on them and estimate whether or not any inheritance tax is likely to be due on their debt. Work out what that tax bill might be and how that would be paid out of their estate in respect of their estate assets. And also what impact it might have on their their beneficiaries as a result of sort of receiving a benefit that's that's net of tax. So that's one first step in terms of best practice. The other I think is to make sure that you're providing access to a financial advisor. And certainly I think so there are lots of people who know that they ought to do some financial planning, but they never get round to it. And it's one of the reasons people give for not coming up with a financial plan is they don't know who to talk to. And so I find it's really helpful if an employer or trustees can nominate somebody to talk to about your personal situation. And so make sure that people are making plans for the future. Then in terms of other aspects, I think communications can be an important risk mitigation for you. So I think we've talked about how there's a risk of delays in this new process. So as part of the communications, you can try and manage expectations and warn people that there is a new process coming in. There is a risk that that means things will take longer than they otherwise would. And you can also, as part of that, suggest that people perhaps have to make sure that they're dependents, have some money in their own name so that if the worst does happen, they've got something to fall back on if necessary. And I was talking to somebody just the other day where their grandfather had died and it had taken six months to obtain a death certificate. And so that had meant that their grandmother was unable to access a bank account, savings or indeed pensions because of the fact that there was no death certificate. And so they'd have to fall back on relying on money from their children in that intervening period until they could actually get the the benefits coming through. So there's a good reason why people should plan and make sure that their beneficiaries have some assets to hand in the worst case scenario. Moving on then to what employers can be doing in regards to life insurance benefits and we've Steve talked about how it's not very clear exactly which benefits are going to be within scope. Whilst the Chancellor in the Budget speech talked predominantly about unused pension pots, the consultation from HMRC is very clear that they see there being 2 objectives from the changes that they're making. One is to make sure that any unused pension pots fall within the inheritance tax regime, but also they're looking to harmonize the treatment of lump sum death benefits. So it's the case that the lump sum death and service benefits from certain public sector schemes are not paid out using discretion. There's an automatic rule as to who will receive the money. And so that means those benefits already fall within the inheritance tax regime. And So what HMRC is saying they're doing as part of these proposals is they're seeking to harmonize the treatment of lump sum death benefits. And that's why they're proposing that those that are paid under discretion from occupational pension schemes, whether those be public sector or private sector, that's why they're proposing that those will also fall within inheritance tax. So I think unless there's a lot of lobbying against this move, I think it's sensible for employers to be working on the assumption that life assurance only scheme benefits will fall within inheritance tax going forward. And so I think therefore it makes sense for you to just double check and see what arrangements you have in place. Steve mentioned sort of two common different sorts of life assurance arrangement. You might have a standard multiple of salary life assurance scheme that would normally be insured, but it would also be set up under trust. And whilst you might not think of that as a pension scheme, and certainly neither the DWP nor the Pensions Regulator would think of it as a pension scheme, it probably is registered with HMRC as a pension scheme because that provides certain tax advantages. Alternatively, you might also have an accepted Lifegupp policy, which as Steve said, is a a separate beast that's set up outside of pensions tax. And so it might be something that you might use more frequently in future if it is the case that that is outside the inheritance tax regime going forward that that that's not yet certain. But whatever sort of arrangement you have, a key question for employers is who does the administration of these schemes. So it might be the case that it's set up under a master trust arranged by your insurer and that means they do the administration. And so the responsibility to calculating and paying the tax is likely to fall on the insurer. So it might mean higher premiums for you, but you won't be directly involved in all of the administrative burden. But alternatively, it might be the case that you've got a stand alone insurance policy, but the the Trustee of the trust that you've got is actually the employer and there is no administrator. And so it might be the burden falls on the pensions manager to process all of this. So once the position becomes clear and you know exactly what's going to be within without scope, I think there's two key actions that you want to take. One is to review the level of cover that you offer to your employees to consider whether that remains appropriate. James mentioned how unmarried couples or those with dependent children might be particularly affected by the changes. Do you want to offer them the opportunity for higher cover? And then also confirm exactly what the sort of process is going to need to be in terms of making sure you're able to ensure that any tax due is calculated and paid going forward. So that's the key issues for employers when it comes to pension scheme trustees, I think the issues are very similar for both defined benefit schemes and defined contribution ones. And what I suggest you do is, as a first step, find out which benefits you pay under your scheme would fall within the proposed changes and how often those are payable. And I found from looking at my clients that this can vary considerably from scheme to scheme. One of my very largest schemes is a multi billion # pension scheme with 10s of thousands of members. I was initially thinking, oh, this will be a big impact for them. But then they pay very few lump sum death benefits on death either before or after retirement. In most cases they just pay a spouse's pension or a continuation of pension and therefore they will have very, very few cases falling in the new regime. Whereas I've got other clients with smaller schemes, maybe just 1000 or 2000 members where the impact is going to be much higher. And one of my schemes, every death in deferment results in a lump sum payment. And also there's a funeral grant paid on the death of a pensioner. So every pensioner death also results in a lump sum. And so that means for that scheme, pretty much every single death is going to result in having to follow this new process. So it's going to be a major burden for that scheme. Having a look at that, then I think the next step is to think about the how long it takes your scheme to pay any lump sum benefits. And the current timetable that you have to abide to is that trustees need to make payments within two years of being notified of a death to avoid income tax being triggered on death benefit payments. And most payments can be made within the two years, but that's two years of being notified under the new regime. As James mentioned, the inheritance tax is due within six months of the end of the month of death. It doesn't matter when the trustees are notified of that death. The deadline for paying the tax and if it's not paid in time, there will be penalties and interest due is 6 months at the end of the month of death. So that's going to be quite a change in process for pension scheme trustees. And what I did just to sort of see put this into perspective was have a look at how long it's taken a scheme to pay benefits in the last year. So this is cases where a death benefit was paid out in 2024, how long a gap was the between the date of death and the date of payment. And you'll see from the first two segments on the chart, it's only sort of it's less than 50% with only 48% of cases were paid under existing processes within that new inheritance tax deadline. The rest of the cases were all paid later. And so that means that trustees aren't going to need to think about what they can do to either expedite the process or avoid penalties and interest being paid. And So what might you do? Well, there might be some circumstances in you which you can pay benefits in a different form, so that that means they then fall out of scope of inheritance tax. You need to make sure that that's something you've got the power to do and it's reasonable to do. But that might be one option. Another thing you can do is to see if you can find out about death sooner so that you've got more time to decide who's going to receive the benefits and make the payment. And so lots of schemes already do monthly existence tracing for existing pensioners. That might be something you want to do for your deferred members. And it might also be the case that you want to do some work in terms of improving the data you've got for your members to make sure you've got up to date addresses. So it's more likely that you're in contact with members that will be thinking about notifying you and also more likely that tracing agencies will be able to notify you of the debt. That's sort of been some of the speeding up the process. Another thing you might do is that where you're aware that the deadline is approaching, but you're not yet sure who you're going to pay the benefit to, you might seek to avoid the tech penalties and the interest by paying the interest up the sort of the inheritance tax and estimates of that upfront in advance. Now that might avoid the 10 penalties in the interest, but then it's no silver bullet because there's a risk then that you've paid the wrong amount or you've paid tax when it's not due. So you'd have to process a refund or an amendment. In terms of other things you could do, you could perhaps delegate more decision making in terms of the payment of death benefits to the administrator or potentially the the trustees might meet more regularly in order to be able to process things faster. So this is some things you you might be able to do. But as we mentioned at the start, another thing you can do is to respond to the consultation. The consultation closes on Wednesday the 22nd of January. So if based on what you've heard here today, you feel those things that you feel strongly about and you want to comment on to HMRC, I'm sure they'd appreciate hearing from you. Thanks, Joe. Back to you questions. Thanks Alistair. And yeah, we, we, we've continued to see questions coming through thick and fast. So thank you everybody. A few I think that are relevant for you. I mean, both you and Steve sort of mentioned the uncertainty about sort of death and service lump sums and exactly, you know, the the vehicle used to provide those and whether they they fall within the scope for inheritance tax or not. When are we expecting that uncertainty to be resolved so we know exactly where where people are? So in terms of what HRC have said so far, they the end of the consultation, they will then consider the responses, they will then make some sort of response and then they will publish draft legislation hopefully towards the end of this year. And it's that draft legislation that would set out the detail of exactly what's going to be in or out of scope of the new regime. So unless people lobby strongly for clarity sooner than that, I think the the current plan is the that we'll find out towards the end of the year what's planned. OK. Thank you. There's a bit of interest as well as you know penalties on late payments. I mean as you know, I think you're on pie chart very clearly illustrated. There's clearly going to be challenges in doing all all this within the six month period if there are penalties due. Do we have a sense of what sort of level that might be at and whether it's the scheme liable or is the Member meeting that in some way? So as I understand it, what's currently proposed is that the the scheme, the trustees will be the ones who are liable immediately for the the tax and any penalties. It will then depend on the scheme rules as to whether or not the trustees have the power to deduct that from the benefits to due to the beneficiaries that they can effectively recoup those costs. And then in terms of the process, from what HMRC have told me, they don't have any discretion as to whether or not to apply interest. So if a payment is late, HMRC are obliged to apply interest to the late payment and that runs at, I think it's 7 or 8% interest per annum is what they have to charge. That can then also be penalties for missing the deadline. I think those are at the discretion of HMRC. So one of the questions that people are exploring as part of the consultation is what, in what circumstances is it reasonable for HMRC to apply a penalty and when would be it be appropriate for them to waive it? But as I understand it, there are sort of three instances there's an opportunity for HMRC to apply penalty if you miss the six month deadline and if you still haven't paid after 12 months, they have a further opportunity to apply penalties. And then if you still haven't paid after 18 months, then again they have a third and final opportunity to apply penalties. OK. Understood. There's a few questions about, I mean some of the lump sums I think that will fall under this may be very small. So I think you mentioned funeral benefits and similarly sometimes 55 year guarantees can be a relatively small cash man. Do those just carry on through this process or have we got any hope that some of those smaller figures might end up being exempt? So in terms of the initial proposal, what's been put out for consultation does not provide any exemption for small lump sums. But it is one of the things that certainly we will be responding to the consultation suggesting that the role to be a denominus or a sort of a fast track process for smaller lump sums. And I know that many others in the industry are are saying the same. Yeah, understood. I mean, as with any change, I guess in the industry, you, you sometimes have sort of knock on other changes. There's been there's been a few questions around the implication of the changes of inheritance tax, both on how individuals might look at sort of gifting money sort of in advance of in advance of death or indeed implications for the annuities market. I mean, Alistair, I don't know if you've got any thoughts on those, but I suspect James and Steve will also have a view. So I mean, Alistair, if you want to give some thoughts on that, I mean perhaps have think about you know the gifting angle and maybe James, I don't know whether you'd like to comment on the annuity angle. So, and in terms of gifting, and I think sort of it's certainly the case that under the the current regime, if somebody makes a gift more than seven years in advance of their death, and as I understand it, that means it would be exempt from inheritance tax. That's something they can do with the assets in their estate. But one of the things you can't do is gift your pension assets away. So unless you're in a situation where you're, you've got benefits in drawdown and you're able to to draw down those benefits and then make a gift. So it's, it's one of the things where pensions are treated differently. And it's also the case that sort of you can't access pension assets if you're under the minimum pension age. So again, there's a couple of the reasons why people might argue that sort of taxing pension assets in exactly the same way as estate assets isn't appropriate because individuals are restricted in terms of what they can do with their pension assets. Thanks Alistair and James, have you got any thoughts on changing behaviours from members? You know, will we see more gifting? Will we see people view annuities as more attractive? I definitely think it's, I definitely it's going to have an impact on people's decision making. I mean, you know, in the same way as Alistair just mentioned, you know, with an annuity, obviously you can't, you can't give the annuity away. You can give away the monthly income that you might be receiving or annual income you might receiving on a very gradual basis which which people can consider. That can obviously help people with regards to their view on maybe other assets they might have, such as I've got a guaranteed secure income coming in that might determine what I do with these other savings that I feel I might never need. So I might consider gifts from that perspective. But again, you know, it is, it is the point that you know, if you've got a defined contribution pension, depending on the option you've taken with it, you can still be more flexible in some cases as to what your decisions are on an ongoing basis. You know, obviously annuities provide that certainty, but then reduce that that flexibility in future. So I think it is going to have an impact until we know the kind of the final outcome of these these consultations, it's hard to say exactly, but I definitely think it's going to have some impact. Thanks, James. And I suppose related to that, I mean there's there've been a number of questions and comments coming through, you know, is this change inheritance tax just almost another nail in the pension sort of coffin? Are people just going to view pensions negatively and worry about, you know, double or triple taxation and look for other investments? I think I don't. I don't know if I'd call it a nail in the coffin. I think it's going to, it's, it's always going to be in the context of what are their other options. You know, clearly somebody who is approaching retirement has already spent their working life building up money and pensions. They have to choose what they do with the money they have already built up or the, the pension arrangements they have already built up. So they might be a little bit more restricted if you're talking about, you know, members of pension schemes adding to pensions accruing from from now on. Yes, I think it could have, could have some impact on, on the decisions that people make. But there are still significant benefits to saving to pensions in terms of tax relief and and you know, the choices that people have available to them. So I don't think it's going to be an all or nothing scenario, but I do think it's going to it's going to prompt some some thinking about the sort of longer term options. Thanks. Thanks for that. James. Steve, have you got any views to add? You know what? What changing behaviors will we be seeing from members going forwards? I think it will be very individual specific. So for example, just to just to walk through a possibility, if I've got some money in ADC part and I'm in pretty good health and think I've got a decent life expectancy and I've got some unused basic rate income tax band, maybe I would take some money out of my pension. Maybe each year, mop up all of my basic rate ban, pay 20% tax on it, give it away as far as I'm able to hope to live seven years. And then although I've paid 20% tax on it, my heirs, yeah, my kids let's say, don't have to pay IHT because I've outlasted the seven to seven-year rule. So you could see, ironically, the government might get a lot of extra tax, not from IHT itself, but from people taking money out of pensions and paying income tax on it with a view to avoiding them further. And that might be particularly true if people are over 75, because obviously over 75 the the recipient could pay income tax on death, whereas under 75 that wouldn't be the case. So it's a really depend a lot on, you know, your age, your health, just you know who you want to pass the money on to, whether it's the first death or the second death, all that kind of stuff. Thanks, Steve. And there's also been lots of questions coming through about the Pensions dashboard and the role that might play in this area. And I know dashboards are definitely another subject very close to your heart. Steve, have you got any thoughts as to how we could, we could use dashboards to support, you know, this new regime? Yes. I mean, so there's huge potential, but there is a couple of reasons why it's not a solution as things stand. So 1 is that dashboards are bluntly for workers, not pensioners. So the government's always seen dashboards as a retirement planning tool, not so just sort of general information where your pensions are. So once you are over pension age, as things stand, your scheme doesn't have to provide data to the dashboard for you. So your heirs and successors, even if they could see it, wouldn't see your pensions on the dashboard. So it might help where people are under pension age or unless and until dashboards show data for pensioners, the the crucial information in most cases won't be there. The other challenge is, as things stand, although there was talk of people being able to nominate a financial advisor or someone else to access their dashboard, I think that's on quite a slow track. So obviously we don't have dashboards yet. That may be a few years away. Provision for someone else to access it, someone with financial power of attorney or an executor or somebody feels like it's quite a long way away. But that does feel like if we are going to go down this route, letting people see pensioner benefits and see the scheme someone was a member of through a dashboard feels like a very good way of if we've got to go to this darn place, let's do it that way. And presumably you could give the personal representative sort of access to the dashboard and that might be a helpful way of, you know, having that information. I just just to PS on my, on my previous comment about it because a few people have commented in the in the chat. Yeah. So obviously there are different ways that you can gift and James would give us chapter and verse on that. But but there is you can give any in any case out of service income. So you don't have to survive seven years for that. But then if you wanted to go beyond that, then you might, you know, be thinking about the seven-year rule as well. So again, it's another one where your exact individual circumstances will determine what your strategy is. Great. Thanks Dave. Unconscious of time, we're approaching the end of our hour today. I mean thank you very much for all the questions coming through. We have covered a range of them, but I'm conscious there are a number still that we haven't addressed. We will get back to you personally afterwards. And indeed, you know, if you have any further questions, having reflected further on the session today, do drop any of us, any of us a line and we'll be very happy to help. So the session will be ending very shortly and you will see a feedback form pop up in front of you. Please do spend a few minutes giving, giving us your feedback. We do really, really appreciate it. And as I mentioned at the beginning, we will have, well, we have recorded this webinar and we will send you a link to that to watch at your leisure shortly after the session ends. For those of you who enjoy our webinars, a couple coming up that I thought I'd just do a very quick plug for. We have our Covenant team sharing their experience of providing Covenant advice in the new DB funding regime on the 23rd of January. And on the 4th of February, we are sharing our insights from advising the trustees in relation to Clara's latest deal for the Weights Pension Fund and both those webinars you can find on our website & up in the usual way. So that just leaves me to say on behalf of all four of us, thank you very much for listening in today and enjoy the rest of your day. _1737594656184