The Government remains focused on the UK’s finances, and confirmed in July that from April 2027, it will go ahead with its plan (originally announced at the Autumn budget last year) to include a person’s unused pension funds as part of their estate for inheritance tax (IHT) purposes. Currently, everyone has a nil rate band of £325,000 of assets they can leave to anyone free of inheritance tax, and while this will not affect everyone, when your pension value is added into the mix, it could mean your estate is then worth more than the amount you’re able to pass on free of inheritance tax.

Meanwhile, the Department for Work and Pensions is revising the Pensions Committee, which, among other tasks, will be looking into the state pension age and the current plans to raise it to 68 by 2046.

Against this backdrop, people may be left wondering if and how these changes will impact them. The Government says it expects the changes to pensions and IHT will impact 8% of estates– a notable increase from the 4.62% recorded in the latest available stats from HMRC. Other factors, such as high property prices in some parts of the UK, also mean that more estates are passing the tax-free thresholds, with loved ones facing an unexpected IHT bill as a result.

There has been a lot of discussion about whether people will consider spending more of their pension during their lifetime as a result of these upcoming IHT changes, instead of leaving this to future generations when they pass away. Advice varies depending on people’s individual circumstances, with some people currently opting to draw money from their pension after using other savings first; however, the new legislation may mean it is more tax-efficient to fund retirement income with the pension pot earlier.

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You might have heard this before, but with anything relating to your long-term savings or investments, it’s rarely a good idea to take hasty action. Pensions and inheritance tax are already complex areas, so it’s important to pause, carefully consider your options, and seek professional support before making any big decisions.

This one thing about planning your estate and saving for retirement continues to be true: the earlier you get a proper plan in place, the better. However, there are still options if you are worried about having started planning too late, or not having enough to live on in retirement or  to pass on to loved ones.

Saving for retirement, having enough money to enjoy your retirement and leaving a legacy, are not the most popular topics of conversation amongst couples, partners and families. But having a plan to make sure you and your nearest and dearest are financially comfortable in the future can give you peace of mind and allow you to fully enjoy the here and now.

Janice Dallas is a financial planner at Aberdein Considine Wealth in Glasgow