250 days to go – 5 conversations to ensure you’ve had before pension IHT changes arrive

What should advisers be reviewing?

Not every client will be affected in the same way. However, clients with substantial pension wealth, particularly those who have deliberately retained pension funds as part of their estate planning strategy, may benefit from an earlier review.

Questions worth exploring include:

• Will the client's pension fund be within the scope for inheritance tax?
• What proportion of a client's overall wealth sits within pension arrangements?
• How does the inclusion of pension funds affect the potential inhertiance tax liability?
• Does the client's existing estate plan still achieve the outcomes they want?
• Are beneficiaries likely to face liquidity challenges following death?
• Have previous recommendations been based on assumptions that no longer apply?

For many clients, the change won't necessarily require immediate action. However, understanding the potential impact can help avoid unwelcome surprises later.

This will turn into more than a pensions conversation

Planting the above questions, can naturally result in greater engagement around wider topics, you may find clients then may wish to revisit:

• gifting strategies
• trust arrangements
• asset ownership structures
• succession planning objectives
• how potential inhertiance tax liabilities might be funded.

These become even greater reasons to be able to demonstrate the value of advice and perhaps be a door opener to referrals.

Where protection could enter the discussion

Protection has long played a role in estate planning, particularly where clients want certainty that funds will be available to meet a future inheritance tax liability.

As pensions are increasingly considered alongside the rest of the estate, some clients may find themselves revisiting solutions that had previously fallen lower on the priority list.

For example, a whole of life plan written in trust can provide beneficiaries with access to funds outside of the estate to help meet a future tax bill. Importantly, protection is not about replacing estate planning strategies. Instead, it can complement them by helping provide liquidity when it is needed most.

A practical example

Consider James, a widower aged 72.

His estate consists of:

• £900,000 in pension assets
• £650,000 invested outside pensions
• a property worth £800,000.

Over several years, James had intentionally retained his pension wealth, believing it would provide an efficient means of passing assets to his children.

With the introduction of the pension inheritance tax changes, his adviser arranges a review.

The conversation isn't simply about tax. It focuses on James' wider objectives:

• How much wealth does he want to pass on?
• When does he want his children to benefit.
• Would he consider making lifetime gifts.
• How can he ensure beneficiaries aren't forced to sell family assets to raise funds?

As part of the discussion, a range of options are considered, including gifting strategies, trust planning and the potential role of protection.

The outcome isn't necessarily a new recommendation. The value lies in ensuring that James' plans remain aligned with his objectives in light of the changing rules.

The opportunity between now and April 2027

With 250 days remaining, advisers still have an important window in which to engage clients proactively.

For some, the pension IHT changes will result in meaningful adjustments to existing plans. For others, the impact may be limited.

Either way, the next few months provide a valuable opportunity to demonstrate the benefits of holistic financial planning…. and with 250 days remaining, if you haven’t started any conversations, today may just be the day for you.