Caroline Anstee head shot talking about inheritance taxBy Caroline Anstee, Managing Director of Anstee & Co.
In the autumn budget last year, important changes to pensions were announced. The main one hitting the headlines was that they will now be included in the estate for inheritance tax. This means that there could be a charge of 40% on the pension and possibly 60% if you are over 75 years old.
These changes take effect from 6th April 2027. Since the announcement, there have been many consultations about how, in practice, this will be paid, initially, they said it would be the pension provider’s responsibility, but after consultation, it has now been agreed that it will be your legal representative (executor) who has the responsibility.
Although many think this is a long way off, there are some really important things to think about now to avoid delays and confusion for your loved ones. Probate is a very laborious and lengthy process already, and it will only get worse.

Things to do now:

  • Remind yourself who your legal representative is (are) and let your adviser know. Will they be able to communicate with the pension provider?
  • Do they know us? If not, make sure they have our details
  • Where is your will (if you haven’t got one, make one now)
  • Who are your powers of attorney?
  • Do the beneficiaries know who we are?
  • Write a letter with the will about your nominations for the pension
  • Review your nominations – if you have your spouse only, consider adding your children (if you have them), it can be 98% (spouse), 1% (child), 1% (Child), but at least they are named, and this will help with the beneficiary pension.
  • How many pensions do you have? The more you have, the more complex it will be. Consider consolidation, however, seek advice as it may not be the best thing for all pensions.
  • Check that your pension offers a BFAD (Beneficiary flexible access drawdown pension) many older plans don’t, and this will be restrictive for your beneficiaries.
  • Consider how the inheritance tax will be paid, reviewing the assets held.
In most circumstances (although there are some exceptions), we are recommending that no action in terms of reducing the pension happens before April 2027, as until then it is outside your estate. However, here are some areas of planning to be thinking about.

How can I reduce my inheritance tax?

PFS logoThere are only 3 considerations to reduce inheritance tax:
  • Spend. We can help with cash flow modelling, to show how financially secure you are and therefore how much you can afford to spend in your lifetime.
  • Gift. There are many ways to gift, outright, in a trust, contributions to savings (pensions and ISAs) for children and grandchildren, and a regular payment out of excess income. There are rules associated with all these options, speak to your adviser.
  • Insure. One of the most effective ways to leave your estate intact but provide the means to pay the tax bill. Think of it as a guaranteed savings plan – you pay a premium on a whole-of-life insurance plan that is guaranteed a pay-out to your beneficiaries.

What are we doing in the lead-up to April 2027?

  • We are keeping up to date with all the consultations so that we can advise appropriately.
  • Over the next 18 months, we will be including all the above topics in our reviews with clients, ensuring that nominations are up to date and including a whole-of-life quote where we think inheritance tax will be payable.
  • We are working closely with local solicitors by delivering presentations, as many will be legal representatives, and they do not have experience of dealing with pension providers.
Please get in touch if you need any advice in this area or know someone who does.

How Anstee & Co. can help your financial planning.

We are a firm of Independent Financial Advisers (IFA’s), This means that the financial advice we offer is unbiased. We will look at all the financial solutions that are available to you from the “whole of market”. This is unlike some financial advisers who will recommend only their products or work from a restricted panel.

call back logo for help with inheritance taxOur experience covers all aspects of financial planning including Pensions, Investments, Mortgages and Estate Planning.

Why not contact us today. The initial “getting to know you” meeting is at our cost.

Our offices and meeting rooms  are located at-

  • Kettering, Northamptonshire
  • Bedford, Bedfordshire
  • Northampton, Northamptonshire
  • Market Harborough, Leicestershire

If you have any thought or comment about this article “Pension changes are coming! Action to take now?”, then please let us know.

Financial Conduct AuthorityThe information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).