\n\t\t\t\t\tCompanies are reporting an increase in wealthy older people withdrawing sizeable sums from their pensions to splash out on family holidays or gift to their children\t\t\t\t\t <\/p>\n
More retirees are looking at withdrawing pension pots earlier, to avoid their savings going to the taxman in the future.<\/p>\n
Financial planners, wealth managers and lawyers are among those reporting an increase in wealthy older people withdrawing sums from their pensions to splash out on family holidays or gift to their children.<\/p>\n
And experts say this has been triggered by the Chancellor Rachel Reeves\u2019s<\/a> decision to pull unspent pension money into the inheritance tax (IHT) net from April 2027, a shake-up announced in the Autumn Budget.<\/p>\n When this change is introduced in two years\u2019 time, large numbers of people will be landed with bigger IHT bills when their family members pass away.<\/p>\n Steven Appleton, partner and head of private client at Brabners Personal, said that there once was a massive disincentive to spend the money from pensions<\/a> because of the IHT treatment on death, but the changes from April 2027 have \u201ccompletely upended\u201d this.<\/p>\n Appleton, a lawyer who specialises in estate planning, said: \u201cThat means we\u2019ll see people spending more while living and looking to enjoy the fruits of their hard savings.<\/p>\n \u201cI\u2019ve always encouraged my clients to consider themselves first and foremost and enjoy life \u2013 whether that\u2019s going on holiday or pursuing a passion they\u2019ve always had but I\u2019m stressing this even more heavily now.\u201d<\/p>\n \u201cAnd clients aren\u2019t just looking to enjoy themselves but still looking for ways to treat their loved ones. That might mean purchasing a holiday home and maximising family time or taking three generations of a family abroad for a once in a lifetime trip.\u201d<\/p>\n Pensioners can withdraw 25 per cent of their pension pot tax-free, up to a total of \u00a3268,275.<\/p>\n Tom Selby, director of public policy at AJ Bell, said the investment platform was also hearing from its advisers that rising numbers of clients were considering accessing their pensions sooner than planned in an effort to avoid IHT<\/a>.<\/p>\n Ian Cook, chartered financial planner at Quilter, said: \u201cI am increasingly having conversations with clients about enjoying the money they\u2019ve worked hard to save. With it likely that the IHT treatment of pensions could be scaled back, some people are rethinking their approach.<\/p>\n \u201cRather than saving every penny for the next generation, it\u2019s a moment to consider whether spending a little more on themselves \u2013 holidays, home upgrades, or experiences \u2013 might now make more sense.\u201d<\/p>\n Matt Conradi, deputy CEO and head of client advisory at Netwealth, said: \u201cWhen advising clients, pension assets are now likely to be pro-actively considered as part of spending or gifting plans in a way that they were not previously.\u201d<\/p>\n How inheritance tax on pensions currently works<\/p>\n Currently, defined contribution (DC) pensions, where you build up a pot of money to give you an income when you retire, would not normally be part of your estate and there would be no IHT to pay.<\/p>\n The estate simply means all the assets like a house, investments or valuables, that someone owns when they die.<\/p>\n