Planning for retirement and understanding upcoming pension changes
In this latest article in The Herald, Financial Planner, Janice Dallas explains how forthcoming pension changes will significantly reshape retirement planning strategies for many.
It more important than ever to seek advice. From the state pension, accessing pension pots or the new implications for many for Inheritance Tax and the transfer of wealth. Future retirees are facing a critical decision point. This article explores the key factors behind the changes, and how you can navigate the risks ahead.
Key Changes:
- From April 2027, unused pension funds will be included in estates for Inheritance Tax (IHT) purposes
- This change is expected to affect 8% of estates (up from 4.62% currently)
- The state pension age is under review, with plans to raise it to 68 by 2046
Inheritance Tax Context:
- Current nil rate band: £325,000 can be left tax-free
- Rising property prices mean more estates are exceeding IHT thresholds
- Including pension values could push more estates over the tax-free limit
Potential Impact:
- People may consider spending their pensions during their lifetime rather than leaving them as inheritance
- It may become more tax-efficient to draw from pension pots earlier in retirement
- Advice varies depending on individual circumstances
Key Recommendations:
- Don't make hasty decisions about pensions and inheritance
- Seek professional advice given the complexity
- Start planning early for best results
- Have conversations with family about retirement and estate planning
- Options exist even if you feel you've started planning late
With significant pension and IHT changes approaching, it's important to review your retirement and estate plans carefully with professional guidance.
The full article can be viewed online here.
