by Kevin Whelan
10:03 AM, 29th November 2024, About 3 hours ago
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The post-2024 budget environment has left many pension holders concerned about the future of their retirement wealth. With Rachel Reeves’ announcement that pension death benefits are set to be brought into the inheritance tax (IHT) net from 2027, the landscape has shifted significantly for those relying on pensions to secure their family’s future. Though the legislation is yet to be finalised, the prospect of this change has created unease, leaving many wondering how to navigate this evolving landscape.
For business owners and property investors, the uncertainty surrounding pensions and IHT underscores the importance of having a robust and proactive plan for your wealth. At WealthBuilders, we believe that no matter the political or economic climate, there is always an opportunity to build a legacy that transcends governmental changes and secures wealth for generations to come. In this article, we’ll explore why SSAS pensions remain a powerful tool in a turbulent pension landscape and outline strategies to protect your legacy in a post-budget world.
The announcement by the Chancellor in October 2024 has sparked significant debate. Rachel Reeves, the Chancellor, declared that pension death benefits, once considered sacrosanct, will fall under the IHT umbrella starting in 2027. While exact details of the legislation are pending, the move has left pension savers worried about the future tax implications for their families.
Pension wealth, long viewed as a secure, tax-efficient vehicle for retirement savings and legacy planning, now feels uncertain for many. Without clarity on the fine print, the looming changes have placed pension holders in a precarious position, particularly for those who lack a structured plan. However, as history has shown, reacting emotionally or hastily to such announcements can lead to missed opportunities.
Despite the uncertainty, one thing remains true: the strength of your financial future lies in your ability to plan proactively. Political and economic turbulence may shift the rules, but a robust pension strategy ensures that your wealth remains protected and continues to grow.
At WealthBuilders, we emphasise that your legacy should not be dictated by the latest budget or tax changes. Instead, by focusing on long-term planning and leveraging tools like the SSAS pension, you can secure a legacy that not only survives but thrives, regardless of the political landscape.
Pensions remain one of the most tax-efficient vehicles for building wealth. Contributions to a SSAS pension, often referred to as the “entrepreneur’s pension,” are particularly advantageous for business owners. Here’s why:
The key takeaway? Pensions and in particular SSAS Pensions continue to be a fantastic environment for wealth growth, even in a challenging post-budget landscape.
A SSAS stands out as an incredibly flexible and entrepreneurial pension vehicle, offering a range of strategies unavailable in traditional pension schemes. For business owners and property investors, the SSAS provides tools to build and protect a legacy that transcends political shifts.
Here are two key strategies SSAS trustees can employ to mitigate the impact of IHT:
Earmarking allows SSAS trustees to designate specific assets to individual beneficiaries. This strategy helps ring-fence assets within the SSAS, whilst allocating them to members of the SSAS who may not have or be using their own allowances effectively and so making full use of the appropriate IHT allowances, reducing the potential tax burden on beneficiaries.
For example, a SSAS could build up benefits for and then earmark a commercial property to adult children or grandchildren who are members of the SSAS, effectively future-funding their inheritance. This proactive approach ensures the assets remain protected within the pension structure, leveraging the SSAS’s tax advantages while creating a clear plan for succession.
The SSAS Loanback facility allows trustees to lend up to 50% of the scheme’s net assets back to the sponsoring business. This offers a dual advantage: providing cost-effective financing for the business while ensuring the pension wealth remains within a protected, tax-efficient environment.
In a post-2024 budget context, the Loanback strategy is particularly valuable. By using pension funds to finance property or business ventures, you can generate returns that ultimately flow back into the SSAS. This approach not only mitigates the immediate tax impact but also strengthens both the business and the pension.
While the budget announcement has cast a shadow over traditional pension strategies, it also presents an opportunity to rethink how we approach legacy planning. A robust legacy is not just about preserving wealth—it’s about creating something larger than yourself that endures beyond political and economic fluctuations.
By leveraging the unique benefits of a SSAS, you can:
Navigating the shifting pension landscape requires knowledge and expertise. That’s why WealthBuilders is hosting a webinar on 10th December 2024, where we’ll dive deeper into the 2024 budget announcement and explore actionable strategies for mitigating its impact on your pension wealth.
During the webinar, we’ll cover:
If you’re a property investor, business owner, or anyone looking to secure their financial future, this is an opportunity to gain valuable insights and guidance.
The post-2024 budget environment may have introduced uncertainty, but it also underscores the importance of proactive planning. A SSAS pension offers unparalleled flexibility and tax efficiency, empowering you to build a legacy that transcends political and economic shifts.
By leveraging strategies like earmarking and Loanback, you can mitigate the impact of IHT, protect your wealth, and ensure that your legacy endures. The power of a SSAS lies not just in its financial benefits but in its ability to give you control over your future, even in the face of change.
Join us on 10th December 2024 to learn how you can turn uncertainty into opportunity and take charge of your pension wealth. Together, we’ll explore how to secure your financial future in a post-budget world.
