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Pensions & Retirement

Majority of UK adults rethink retirement due to IHT changes on pensions, survey finds

The survey revealed that 21% intended to withdraw more money from their pensions to spend it, and 19% aimed to gift it.

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Majority of UK adults rethink retirement due to IHT changes on pensions, survey finds
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Over half (54%) of UK adults planned to change their retirement or estate planning ahead of upcoming changes to inheritance tax (IHT) on pensions, research from interactive investor found.

The survey revealed that 21% intended to withdraw more money from their pensions to spend it, and 19% aimed to gift it.

Additionally, 8% planned to reduce pension contributions, and 6% intended to retire earlier due to these impending changes.

Chancellor’s October Budget included provisions to incorporate unused pension savings and certain pension death benefits into estate values for IHT starting April 2027.

Many respondents were uncertain about the final implementation details, but 13% were undecided on their plans, and 34% had not considered any changes.

Pensions was a significant factor in estate planning for 52% of respondents, while 23% included pensions to limit IHT but did not delve into specifics.

A quarter (25%) had not considered pensions in their planning.

Confidence in the pensions system was low, with 44% of respondents expressing no confidence and 17% unsure, while 39% maintained faith in the system.

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Myron Jobson, senior personal finance analyst at interactive investor, said: “We were delighted to welcome such a large group of buy-to-let specialists to our first workshop, to analyse our research and discuss the future of the PRS.

“The findings of this research can help lenders plan ahead as they look to cater for the changing needs of buy-to-let investors in a pressured and professionalising market. But mortgage lenders can only do so much.”

Jobson added: “These findings present a stark warning to government. It must find ways to nurture the PRS and encourage more investment in the sector if we are to avoid severely deepening the UK’s housing crisis.

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“As a start point, the government should promise policy stability in order to boost landlord confidence.

“It seems too late to turn back the clock on the Renters’ Rights Bill, but the government should commit to no more legislative changes and no further tax increases for landlords.”

He said: “Research we carried out before the last Budget revealed that 39% of landlords would stop investing and 19% exit the market if CGT on the sale of second properties were increased.

“Rachel Reeves made the right decision in not hiking CGT in October 2024. She must not be tempted to squeeze landlords further in future.”

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