Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to paragraph 2.51 of the Autumn Budget 2024, HC 295, published on 30 October 2024, what her Department's policy is on the application of inheritance tax to (a) unused pension funds and (b) death benefits in relation to the (i) Ministerial and (ii) Civil Service Alpha pension schemes after April 2027.

As announced at Autumn Budget 2024, unused pension funds and death benefits payable from a pension will form part of a person’s estate for inheritance tax purposes from 6 April 2027.

These reforms impact on inherited sums arising from both defined contribution and defined benefit schemes. Both the Civil Service Alpha scheme and the Ministerial Pension Scheme are discretionary schemes, which means that lump sum death benefits paid from these schemes would previously not have formed part of a person’s estate for inheritance tax purposes.

As a result of these reforms, from 6 April 2027, lump sum death benefits paid from these schemes will form part of a person’s estate for inheritance tax purposes.

It is worth noting that non-discretionary defined benefit schemes, such as the NHS, are already within the scope of inheritance tax.