Overview
- From April 2027 most unused defined‑contribution pension pots and pension death benefits will be counted in a deceased person’s estate for Inheritance Tax, a change first announced in the 2024 Budget and due to take effect next spring.
- Government forecasts show about 213,000 estates will include unused pensions in 2027–28, a figure industry groups are using to plan outreach and product responses.
- Providers and advisers report sustained customer activity including pension withdrawals, consolidation, ISA transfers and a sharp rise in life‑insurance purchases aimed at covering possible IHT bills.
- Major firms such as Royal London, Standard Life, Hargreaves Lansdown and AJ Bell are urging Chancellor John Healey and HMRC to provide clear, early guidance and to rule out further destabilising pension changes before the October Budget.
- Choices to avoid IHT carry trade‑offs: ISAs still count towards estate value, inherited pension income can trigger income tax if the holder died over 75, annual ISA limits restrict transfers, and advisers warn that rushed withdrawals can harm retirees’ finances so personalised advice is essential.