Advisers rethink pensions advice after Budget changes

The IHT changes announced in the Autumn Budget have triggered a shift in the advice that IFAs are providing to their clients, according to a new study. Standard Life said advisers are rethinking how to structure income for clients with pensions set to be brought into scope of inheritance tax from 2027. Four fifths, 82%, of IFAs said they have re-evaluated the role of pensions in client planning following the 2024 Budget with one in ten (10%) undertaking a full review across their client base. Two-thirds, 69%, have recommended clients increase retirement income withdrawals, and three-quarters, 74%, have re-evaluated the role of annuities, with more than a quarter, 27%, increasing the number of annuity purchases they are recommending. Among adviser who have had conversations with their clients, almost half, 43%, have recommended an increase in retirement income of 5% or more. Looking ahead, two thirds, 62%, of IFAs anticipate further changes to allowances or tax rules, either in the 2025 Spring Statement or in the next Autumn Budget. Claire Altman, managing director of individual retirement at Standard Life, part of Phoenix Group, said: “The planned extension of inheritance tax to cover pension assets from 2027 has clearly had a profound effect on how IFAs are advising their clients, and the fact that such a large number are having conversations with their clients about increasing the level of income they take in retirement gives a clear signal as to how advisers are responding to these changes. “Traditionally, advisers have used a benchmark of 4% when it comes to client pension withdrawals each year, and it is striking to see that they are now advising an additional 4% on average, with significant numbers recommending an additional 5%. “In addition to increasing withdrawal rates for those in drawdown, advisers are also considering other means of taking an income and are turning to annuities in increasing numbers due to a combination of the certainty they provide and the attractive rates on offer.” Research commissioned by Standard Life and conducted by Opinium with a representative sample of 200 UK IFAs between 6 February – 12 February 2025.

Advisers rethink pensions advice after Budget changes

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