One in five (19%) HNWs aged 55 and over are completely unaware of the pension changes coming into effect in April 2027, according to new research from Charles Stanley, part of Raymond James Wealth Management.
From 6th April 2027, a major change to inheritance tax (IHT) rules will affect how pension pots are treated upon death, with unused private pensions included as part of an individual’s estate for inheritance tax. This could bring millions more estates within the scope of IHT.
Those aged over 55 are the most likely to be affected by these pension changes, yet are the least aware of them. While 51% say they are somewhat aware of the changes coming into effect, they have only heard of them and don’t know exactly what they are or what they mean. This means a considerable number of people are at risk of paying more IHT than expected, leaving beneficiaries of estates exposed to higher tax.
Alarmingly though, of those who are aware of changes coming into effect, a quarter (25%) of 55+ year olds are actively not taking any action to account for the pension changes. 13% have not taken any action yet but plan to, while 8% don’t know what they can do to account for the upcoming changes.
For those who are taking action, 15% say they are spending money from their pension to reduce their IHT liability, while 14% say they are more focused on alternative tax-efficient savings vehicles (e.g. ISAs). 13% say they have changed their financial plans to reduce the possible IHT burden they face, and another 13% have sought professional advice on what they should do.
More generally when thinking about the pension changes for 2027, sentiment among those aged 55 and above is largely negative. 32% say they feel disappointed by the pension changes coming into effect, while 23% feel frustrated and 20% feel disillusioned. Conversely, 10% feel confident about the pension changes, and only 8% said they felt prepared. A further 8% said they are unbothered when thinking about the pension changes coming into effect.
Harry Bell, Director Financial Planning at Charles Stanley, comments:
“Pensions are among the most valuable assets people hold, yet many remain unaware of how upcoming reforms could affect their estate planning. From April 2027, unused pension pots will fall within the scope of inheritance tax, which could significantly increase liabilities for families.
“While there’s no need for knee-jerk reactions, understanding the implications and planning ahead is essential. These changes alter long-standing assumptions about retirement planning, so taking advice now is crucial to avoid unexpected tax bills and ensure your wealth supports both your income needs and your legacy”.
