The Downing Brief: 30 Years On—Still Ignoring Wills and Pensions

I continue to be surprised and disappointed to see that so many people when it comes to putting in place the right tax efficient Wills or indeed investing money to build an income, when they retire through pension planning believe they need not do this now and will address it later. The horror of people dying without a Will means that the Government in effect make the Will for you and it is unlikely to be in accordance with your wishes and to add to that the mess left behind dealing with Probate can be disturbing for your beneficiaries.

Now look at pensions. I recall gosh probably 30 years ago giving a presentation to around hundred or so employees of a firm down in Witney. I have not checked but I doubt whether they even still exist.  The company were paying 10% of salary into a final salary pension scheme or a defined contribution scheme and also we had put in place a group life assurance scheme paying four times salary in the event of an employees death in-service.

The fact that the pension scheme was actually costing 25 times as much as the group life assurance scheme did not matter. The employees had a great appreciation for the big lump sum protection on death in-service.

I read a while ago that the average sum in a UK individual private pension is only around £50,000 which would create nominal income in retirement.

The important need to put the right tax efficient Wills in place sadly is not happening as we would hope. Around a third of people over age 55 do not even have a Will. Next when it comes to building a pension plan the psychology that it is so far away means that so many ignore it even though valuable tax benefits are offered with tax relief on contributions and funds would pay no tax on income nor Capital Gains Tax. In passing the Government haven’t helped the situation in the last Budget by making pensions liable to Inheritance Tax.

I have just discussed two situations with Wills and pension planning where so many do not address these important issues. On reflection that has not changed in the last 30 years, but I do hope we can help people by changing this in the future.