More than half (54%) of UK adults plan to adjust their retirement or estate planning in response to inheritance tax changes on pensions, according to a new poll by interactive investor.
In October, Chancellor Rachel Reeves announced plans to include unused pension savings and certain pension death benefits in the value of estates for IHT purposes from April 2027.
A Freedom of Information request by interactive investor to the Office for Budget Responsibility revealed that almost 153,000 estates will now face new or additional IHT liability by 2030.
While the final details of the proposed policy remain unclear, interactive investor said 21% of respondents polled plan to withdraw more money from their pension than originally intended and spend it.
A similar number (19%) plan to withdraw more and gift it, while 8% intend to reduce their pension contributions and 6% plan to retire earlier than originally expected due to the impending change.
Meanwhile, 13% remain undecided and a third (34%) have not considered altering their current retirement or estate planning strategy.
When asked about the role of pensions in estate planning, 52% of those surveyed said their pension forms a key component of their strategy. Just over a fifth (23%) said they consider pensions as part of their plan to limit IHT but not in detail, while a quarter (25%) said they have not factored pensions into their estate planning at all.
Separately, the poll also showed that 44% of respondents have no confidence in the pensions system with an additional 17% unsure. However, 39% said they had confidence in the system.
Myron Jobson, senior personal finance analyst at interactive investor, said: “Our survey shows that, despite uncertainty over how IHT on pensions will be implemented, many people are already considering pre-emptive steps to reduce their future tax burden.
“It’s interesting to see that more people are considering drawing down larger sums from their pensions in response to these changes. At first glance, this might seem like a savvy move – accessing funds now to spend or gift before new tax rules come into effect.
“But there are important trade-offs to consider. Withdrawing more than necessary could push retirees into higher tax brackets, resulting in an unnecessarily large tax bill. There’s also the risk of depleting pension savings too quickly, leaving less for later life. While gifting money can be a tax-efficient strategy, careful planning is essential to avoid unintended financial pitfalls.”
Jobson said that significant changes to the pensions system risk undermining confidence in it, with stability and clarity essential to ensuring people feel secure in their retirement planning.
“Without them, there’s a danger that more individuals may disengage from pensions altogether, potentially leaving them worse off in later life,” Jobson added.
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