Advisers are taking a number of steps to help clients get ahead of pensions becoming subject to inheritance tax in 2027, new research from Scottish Widows has revealed.
Nearly six in 10 (57%) advisers say their clients are uncertain about the changes, which will come into force next April. However, with just under a year to prepare, Scottish Widows’ Investor Confidence Barometer shows that more than half (55%) of advisers are recommending lifetime gifting strategies to clients.
A similar number (51%) are reviewing clients’ retirement income and spending assumptions, while 49% are encouraging an earlier drawdown of pension assets.
Around a third (32%) of advisers have also suggested the use of alternative tax-efficient wrappers such as ISAs and 37% are advising clients to use trusts or onshore bonds. Nearly a fifth (18%) have also recommended the use of family investment companies.
Scottish Widows said 48% of advisers view the changes as an opportunity to initiate earlier family conversations around intergenerational wealth planning.
Jenny Davidson, intermediary wealth director at Scottish Widows, said: “Pensions have long been a cornerstone of estate planning, offering a highly tax-efficient way to accumulate and pass on wealth. Next year’s shake up represents perhaps the biggest change we’ve seen to pensions since pension freedoms, but one that advisers are already getting well ahead of, according to our research.
“Any sizable landscape shift like this offers advisers an opportunity to demonstrate their value and engage with wealthier clients. Those advisers who act early and help guide clients through this process will reap the long-term benefits of closer relationships and greater trust.”
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