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11h
March 2006
Inheritance tax and pensions plunge will
hit tomorrow's retirees
Between mounting debts and low
wages, today's younger generation face difficult times
ahead. As the boomer generation eats up savings to fund
their own retirement, trouble faces ahead. According to a
survey by stockbrokers Wise Speke, British workers are
unprepared and will face nasty surprises when they come to
inherit.
The
generation of young workers aged 18 to 35 years might run
into some serious problems when they inherit. Increasingly
under financial pressure, this generation hopes to fund its
later life by inheriting from the previous wealthier boomer
generation. According to a survey by stockbroker Wise Speke,
27% of British respondents rely on their inheritance to fund
their retirement. 60% of these Britons state that they will
do so because of the collapse of pension funds.
The shocking truth is that this cherished inheritance might
have disappeared by the time young workers reach retirement.
Savings and home equity are being used up by today's
retirees. Given the rise of life expectancy, personal assets
will help fund long retirements and costly medical
attention.
Those who bank on their parents' funds will also be nastily
surprised by inheritance taxes. Wise Speke states that 23%
of Britons do not know that inherited assets worth more than
pounds 285,000 are taxed by 40%. Those with modest funds
will be hard hit by the taxes.
60% of British respondents who plan to leave an inheritance,
have not carried out any tax planning. Many suggest that
inheritance taxes should be index-linked to house prices.
Given that property prices have rocketed, inheritance tax
disadvantages home owners with modest incomes. Stuck between
mounting debts and limited inheritances, younger workers
today face a difficult future.
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