The new Labour government held its first budget on 30 October 2024. The main change proposed for pensions affects how Defined Contribution (DC) pensions (like your Trust Pension Account) are treated when a member dies and their pension is left to someone other than their spouse or partner. This may mean your loved ones could pay more tax on any pension benefits you leave behind.

Inheritance Tax (IHT)

When a member of a DC pension scheme dies, they’re able to pass their unused pension on to a beneficiary. Currently, this can be paid free of inheritance tax (IHT) depending on the member’s age at the time of their death.

It has been proposed that this will no longer be the case and inherited DC pensions upon death, regardless of the age of the member, will be subject to IHT. The exception would be where any unused pension benefits were paid to a spouse or civil partner, as this would still be covered by the IHT spousal exemption.

Whilst the proposed change is planned to come into force in April 2027, the legislation recently went through a process of consultation which ran until 22 January 2025.

You can read more about IHT and how it works here.

Nominating your beneficiaries

A nomination of your beneficiaries tells your pension scheme who you want to receive any pension benefits due when you die.

It’s important to review it regularly as life changes like having children, getting married or going through a divorce can mean your preferences change over time. Checking and updating your nominated beneficiaries only takes a few minutes but can save your loved ones a lot of stress down the line.

You can easily nominate a beneficiary or make amend your choices, by logging into your Trust Pension Account. Click here to log in.

If you prefer completing a traditional form, click here.