Getting the most out of your retirement and reaching your goals requires careful planning.
But as we all know, life doesn’t always go to plan.
If you decide you want to retire sooner than originally planned – whether due to circumstances beyond your control, a health crisis, or a simple change of heart – a pension shortfall may require a rethink.
This guide shares five steps you can take to help you plan for a pension shortfall, build a strong financial foundation, and start enjoying your retirement sooner.
Download your copy here: 5 essential steps to plan for a pension shortfall if you want to retire early
If you want to retire early and would benefit from experienced advice and support to ensure you can generate a sustainable income for the duration of your retirement, please get in touch.
Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.
Estate planning isn’t always as straightforward as leaving everything to a spouse or direct descendant.
In fact, many people in the UK are opting to leave some or all of their wealth to their “chosen family”. Research cited by Today’s Wills and Probate (29 January 2026) found that, of those surveyed, 1 in 8 have named a non-blood beneficiary on a life insurance policy, such as:
Whether you’re leaving your entire estate to one person or dividing it among multiple, there are many ways you can pass on wealth to protect your chosen family. By carefully planning your estate, you could simultaneously help ensure your beneficiaries receive their intended inheritance and mitigate your estate’s Inheritance Tax (IHT) liability.
Read on to explore four ways you could choose to pass wealth on to your preferred beneficiaries and key things to consider.
Without a valid will, your estate will likely be divided according to the rules of intestacy, which generally sees blood relatives inherit in a rigid priority order – starting with spouses and civil partners, and ending with half-aunts and half-uncles. If no eligible relatives can be found, your estate passes to the Crown.
As such, you might wish to name your chosen family as beneficiaries in your will. This could allow you to leave them any assets you wish, such as cash, investments, your home, or valuable items.
It’s vital to ensure your will is accurate, clear, and up to date. Once you’re no longer able to speak for yourself, an ambiguous or out-of-date will could expose your estate to questions over its validity.
This is particularly important if you have relatives who might try to claim entitlement to your assets after you have passed away. According to MoneyWeek (23 October 2025), in the five years to 2024/25, attempts to have a will ruled as invalid surged by 61%.
Commonly, wills are contested on the grounds that the deceased lacked mental capacity or was pressured into signing over certain assets. In other cases, a will might be found as fraudulent or invalid due to errors such as missing signatures.
A financial planner can help you understand how to divide your assets and refer you to a legal professional if appropriate. Please note, the Financial Conduct Authority (FCA) does not regulate will writing.
To help ensure your chosen family receive a portion of your wealth, you might consider giving financial gifts in your lifetime rather than waiting to pass assets on after you die. This can simultaneously mitigate the risk of disputes and allow your loved ones to benefit from your wealth earlier in life.
Gifting could also help reduce your estate’s IHT liability, meaning a larger portion of your wealth can go to your chosen beneficiaries, rather than to HMRC.
Typically, gifts given more than seven years before your death are excluded from your estate for IHT purposes. Should you die within those seven years, your gifts may be subject to IHT at a tapered rate, depending on your personal circumstances and the total amount gifted.
However, some gifts may be immediately excluded from your estate for IHT purposes. For example, as of 2026/27, the Annual Exemption allows you to give up to £3,000 a year without the gifts counting towards your IHT bill – regardless of when you die.
Keep in mind that allowances, thresholds, and tax rates, including those relating to IHT, are subject to change.
Your personal circumstances will affect your tax position. A financial planner may help you define a plan to make gifts tax-efficiently, while assessing how much you might comfortably give away. Please note, the FCA does not regulate estate planning.
In addition to, or instead of, leaving assets to your chosen family via your will, you might opt to name them as the beneficiary of your pension.
You can nominate a person or charity by completing an expression of wishes form through your pension provider. This is typically completed when you first sign up to the pension scheme. However, it’s important to keep your expression of wishes documentation up to date as your relationships and choices change.
While an expression of wishes isn’t legally binding, and pension trustees will ultimately have the final say, documenting where you want any unused pension funds to go can help the trustees fulfil your wishes.
Generally, your beneficiary will pay Income Tax when receiving your pension funds if you die after age 75. What’s more, from April 2027, unused pension pots will be included in estates for IHT calculations. As such, it’s important to consider your pension’s tax liabilities when planning to pass your pot on. Otherwise, your beneficiaries may receive less than you had expected.
As mentioned, 1 in 8 UK adults have named their chosen family as the beneficiary of a life insurance policy, with 1 in 7 believing their non-blood loved ones would be more financially affected by their death than blood relatives.
In some cases, life insurance may offer greater financial protection for your chosen family than the prospect of inheriting your wealth. Assets left in a will, and your pension pot, could reduce throughout the rest of your lifetime – particularly if you need care later in life.
By contrast, provided you continue to pay your premiums up until your death, life insurance can offer your loved ones a guaranteed lump sum payment when you pass away.
If your estate could be liable for IHT, by placing your policy in trust, you may be able to mitigate a potential bill. The options for insurance and trusts are complex, so it’s often worth speaking with your financial planner and a legal professional for help weighing your options before you make any irreversible decisions.
When planning to leave your assets to loved ones, having a comprehensive estate plan can offer invaluable protection to help your chosen beneficiaries receive their intended inheritance. For estate planning support, speak to our financial planners today.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Thousands of people delay claiming their State Pension every year. There are some potential benefits, including managing their tax liability, but there are also drawbacks that are important to consider.
The State Pension is a regular government payment you may receive from when you reach State Pension Age until you die. The current State Pension Age is 66, though it is gradually rising and is expected to reach 68 in 2046.
The full rate of the new State Pension is £241.30 a week in 2026/27. However, your personal circumstances and National Insurance record will affect your entitlement.
You can use the government’s State Pension forecast to see when you could claim the State Pension and how much you can expect to receive.
If you choose, you can delay claiming your State Pension. According to data collected by Royal London (28 January 2026), almost 42,000 people deferred their State Pension in 2023/24, and 1 in 4 of these pensioners postponed taking their State Pension for five years or more.
Find out why some people might be delaying their State Pension and the potential drawbacks of doing so.
1. You’d receive a higher State Pension payment when you claim it
One of the benefits of delaying your State Pension is that you’ll receive higher payments when you do claim it.
For every nine weeks you defer, your State Pension will increase by 1%. This works out at just under 5.8% if you defer for a year. For example, in 2025/26, the full new State Pension was £230.25 a week. If you deferred for the full year, you’d receive an extra £13.35 a week.
In some cases, you may be able to receive the additional amount as a one-off payment.
If you reached the State Pension Age on or after 6 April 2016, you can usually claim a one-off arrears payment of up to 52 weeks. If you reached State Pension Age before this date and deferred for at least 12 months, you could receive a lump sum payment, which will include interest of 2% above the Bank of England base rate.
2. Delaying your State Pension could be tax-efficient
If you plan to work past the State Pension Age or receive an income from other sources, delaying your State Pension payments could make sense from a tax perspective.
Your State Pension counts as income, and you could be liable for Income Tax. As a result, receiving the State Pension could increase your tax liability and potentially push you into a higher Income Tax band. For some, this could make delaying payments an attractive option.
Your personal circumstances will affect your tax position. An accountant may help you assess what’s appropriate for you by providing tailored tax advice.
1. You might not break even
One aspect to consider before delaying your State Pension is how long it would take to break even.
According to the government (6 April 2025), it will take more than 15 years to get back 52 weeks of the deferred full new State Pension. This time increases by around a year for each additional 52 weeks you defer.
So, while you’d benefit from higher payments once you do claim the State Pension, you could receive less overall.
2. Higher State Pension payments could increase your tax liability in retirement
As mentioned above, the money you receive from the State Pension is classed as income for tax purposes. So, deferring your State Pension to receive a higher amount in the future could increase your tax liability in retirement.
If your total income is below the Personal Allowance, which is £12,570 in 2026/27, you don’t need to pay Income Tax. However, in 2026/27, the full new State Pension is only just below this threshold at £12,547.60, so deferring is likely to push your income above the Personal Allowance before you factor in other sources of income.
Receiving a higher income from the State Pension might also affect eligibility for means-tested benefits.
So, you could benefit from considering the long-term tax implications of deferring your State Pension before you make a decision.
You need to claim your State Pension when you’re ready to receive it. So, if you wish to delay the payments, you don’t need to do anything.
However, it may be a good idea to assess this decision as part of your overall financial plan. As financial planners, we could help you calculate whether the potential tax benefits of delaying your State Pension make sense for you and assess alternative options. Please get in touch if you have any questions.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
It’s common to be juggling different goals with various time frames, which can be difficult to balance.
Over the next few months, you can read tips on managing short-, medium-, and long-term financial goals, and how a financial plan could help you bring them together on our blog. This month, read on to find out why short-term goals are just as important as your long-term ones, and how you might make the most of your money.
Typically, short-term goals are defined as those occurring within the next two years. They might include going on holiday, buying a car, or paying for a wedding.
Alongside saving for retirement or paying off your mortgage, your short-term goals might feel less important. However, they’re just as valuable for your overall wellbeing and play an important role in your financial plan.
When you’re working towards a short-term goal, holding the money in cash is often appropriate. This is because if you invest your money, it could be exposed to short-term market volatility, which could affect your ability to reach your goals.
While the value of your savings in real terms is lower if the interest paid is lower than the rate of inflation, the effect of this over the short term is less severe than if you were saving for a long-term goal.
As well as goals you’re working towards in the next two years, you might also want to include an emergency fund to cover unexpected expenses as part of your cash savings. This fund could provide you with peace of mind and financial security should something happen, such as your roof leaking or an inability to work due to illness.
As you want to be able to access the money quickly in the event of an emergency, a cash account often makes sense.
Even when you’re working towards short-term goals, there may be ways you can make your money work harder. Here are three options you might want to consider when holding cash.
1. Savings account
A savings account is a common place to hold cash for short-term goals.
The money you deposit will earn interest. It’s worth looking at different accounts as the interest offered can vary significantly, and some may offer higher introductory rates or attractive incentives, such as a one-off bonus. Even a small difference in the interest rate could boost your savings.
It could be useful to automate payments to your savings account, so it’s part of your regular budget. Viewing savings as essential may help you stay on track and mean you’re less likely to spend the money on something else.
2. Cash ISA
A Cash ISA is similar to a traditional savings account – your deposited money earns interest. However, ISAs offer a tax-efficient way to save and could be valuable if you might otherwise pay tax on the interest earned.
The Personal Savings Allowance (PSA) is the amount you could earn in interest before tax may be due. The allowance depends on the rate of Income Tax you pay. In 2026/27, the PSA is:
You might be surprised by how easy it is to exceed the PSA. For example, if your savings account paid interest of 4.5%, you’d only need to deposit £11,111 before you could start paying tax on the interest.
The good news is that interest earned from money held in a Cash ISA is not liable for Income Tax.
So, if you might pay tax on your savings, a Cash ISA may provide a way to reduce or eliminate the potential bill.
In 2025/26, you can deposit up to £20,000 into ISAs, and you may place the full amount into a Cash ISA if you choose. From 6 April 2027, if you are under the age of 65, your total ISA allowance will remain at £20,000; however, the Cash ISA limit will fall to £12,000.
Remember, tax liability and tax-efficient strategies should consider your personal circumstances, and allowances and exemptions are subject to change.
3. Premium Bonds
Finally, Premium Bonds might be an option for your cash savings.
Premium Bonds are issued by NS&I, so they’re backed and guaranteed by the Treasury. Rather than paying interest on savings, bonds are entered into a monthly prize draw. As of April 2026, each bond has a roughly 23,000-to-1 chance of winning, with prizes ranging from £25 to £1 million.
While the opportunity to win big is exciting, keep in mind that Premium Bonds do not pay interest, so the value of your savings could fall due to the effects of inflation if you don’t win.
The maximum you can hold in Premium Bonds is £50,000.
Transfers from a Premium Bonds account can take several days, so this option might not be suitable as your emergency fund.
National Savings & Investments (NS&I) are not regulated by The Financial Conduct Authority.
If you’d like to talk to us about your goals and how you might use your money to reach them, please get in touch.
Next month, read our blog to discover how you might manage your money when you’re working towards medium-term goals.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Managing your pension doesn’t stop once you retire and start to draw an income from it. In fact, your pension still needs careful attention in retirement – just as much as when you were contributing – to ensure you don’t deplete it too quickly.
Research suggests that many retirees aren’t taking professional advice and are potentially making financial decisions they’ll regret in the future.
According to the Financial Conduct Authority (FCA) (22 September 2025), in 2024/25, less than a third of people accessing their pension for the first time took regulated financial advice.
In addition, an FTAdviser article (5 March 2026) noted that a previous survey found that many retirees will deplete their pension by their late seventies if they maintain their current withdrawal rate, leaving the average person with a nine-year shortfall. 1 in 7 already regret how much they’ve withdrawn.
Pension Freedoms were introduced in 2015 and changed how you could access your defined contribution pension.
With a defined contribution pension, you and your employer both contribute to a pot, which is usually invested. When you retire, you use this pot to create an income. Under Pension Freedoms, you have several options, which can provide retirees with the flexibility to create an income that suits them.
However, you’re also responsible for ensuring your pension provides an income for the rest of your life. As a result, there’s a risk that you could spend too much too soon, or that a poor financial decision has a long-lasting impact.
1. Consider your life expectancy
The research reported by the FTAdviser suggests the average person could deplete their pension nine years before the average life expectancy, which could leave them in a financially vulnerable position.
According to the Office for National Statistics, the average 65-year-old woman has a life expectancy of 88. For men of the same age, it’s 85.
Yet, using the average figure when assessing your pension withdrawals could still leave a gap, as many people exceed this. For example, 1 in 4 65-year-old women will celebrate their 95th birthday, and 1 in 4 65-year-old men will reach 92.
2. Calculate the effects of inflation
One of the challenges of retirement planning is that you need to consider how your expenses will change over several decades. One of the factors that will affect your outgoings is inflation.
The Bank of England inflation calculator shows that an annual retirement income of £30,000 in 2015 would need to have grown to more than £41,000 by the end of 2025 simply to maintain your spending power.
As retirements are likely to span several decades, failing to factor in inflation when creating a withdrawal strategy could leave you struggling financially day to day or at risk of depleting your pension too soon.
3. Understand your guaranteed income
Having a guaranteed income that could cover your essential outgoings could offer peace of mind.
Most retirees will receive a reliable income for life from the government once they reach the State Pension Age. In addition, you may use your pension to purchase an annuity, which would provide a regular income for the rest of your life.
The amount you receive from an annuity will depend on the rates you are offered, which may be affected by your personal circumstances and external factors. You might also select an annuity where the income rises in line with inflation to preserve your spending power or provide an income for your partner if you pass away first.
You can use some or all of your pension to purchase an annuity to suit your needs. The decision is often irreversible, so it’s important to assess if an annuity is right for you first.
4. Assess your drawdown strategy
One way you might access your pension is known as flexi-access drawdown. This allows you to withdraw money from your pension and adjust the amount to suit your needs.
For many retirees, their income needs will change. So, this option can be valuable, and it’s important to calculate what your sustainable spending rate is to avoid running out of money.
Working with your financial planner to create a cashflow model could help you visualise how long your pension would last, depending on different withdrawal rates, including if your income needs rise and fall. It’s important to note that while a cashflow model can be useful when making financial decisions, the outcome isn’t guaranteed.
5. Make potential risks part of your retirement plan
You can’t always prevent events from affecting your finances, but you might be able to take steps so you’re in a better position to manage them.
For example, maintaining an emergency fund in retirement could help you cover unexpected costs, such as property repairs, or you might draw income from it during a period of market volatility if your pension remains invested.
In addition, you might also need to be aware of investment risk.
If you choose to leave all or a portion of your money in your pension, as you would if you use flexi-access drawdown, it will typically remain invested. During periods of volatility, the value of your pension might fall or rise as a result. If you continued to withdraw money from your pension at the same rate during a period of downturn, you might deplete your pension faster than expected.
Being aware of investment performance and scheduling regular reviews with your financial planner could help you manage investment risk and highlight where you might benefits from adjusting your withdrawals.
6. Schedule regular reviews with your financial planner
Finally, scheduling regular reviews with your financial planner could provide you with an opportunity to ask questions and assess whether your withdrawals remain sustainable. By checking your pension throughout retirement, you might be in a better position to spot potential risks to your financial security.
If you’d like to arrange a meeting to talk about your pension and retirement, please get in touch.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate cashflow modelling.
Deciding how you’d like your assets to be managed later in life and after you pass away may be intimidating. However, a cashflow model could help you answer both financial and emotional questions, so you’re in a better position to tackle your estate plan.
According to a survey conducted by Aegon (5 March 2026), 1 in 3 UK adults has done nothing to prepare for death. Even among adults who have taken steps to prepare, many haven’t completed the full process. For example, while 38% said they’d written a will, only 18% had organised their core financial documents, such as pension information, insurance details, or account records.
While it may seem that estate planning is something you can put off until later, being proactive can be valuable. Not only could it offer peace of mind, but a longer time frame could present opportunities to pass on gifts during your lifetime and make tax-efficient decisions.
Cashflow modelling is a powerful tool that allows you to input information about your current finances and then use assumptions to project how the value of your assets might change. You may incorporate variables like expected investment returns, planned outgoings, or when you hope to start using your pension to create an income.
The output of cashflow modelling might help you make more informed decisions.
For example, when you’re planning for retirement, you might model several different scenarios to understand how your retirement age may affect your income. Or you could use it to calculate what a sustainable income throughout retirement would be for you.
It’s important to note that the output of a cashflow model cannot be guaranteed and will be based on the information you input and the assumptions made.
However, a cashflow model could be valuable when you’re making important decisions, including those relating to your estate plan. Here are five reasons why you might benefit from using a cashflow model when you’re thinking about how to use or pass on your assets in the future.
1. Assess the impact of gifting during your lifetime
For many people, gifting to loved ones during their lifetime is a goal. You might want to help adult children get on the property ladder, boost their income, or cover the cost of a grandchild’s school fees.
However, you may be worried about how it’ll affect your financial security in the long term. A cashflow model could help you visualise the potential impact of gifting to understand if it’s an option you want to consider.
2. Decide how to pass on your estate
The value of your estate may affect how you choose to divide your assets. As a result, a cashflow model can be a useful tool when thinking about inheritances.
Understanding the value of your assets could be useful for your beneficiaries too, as their expected inheritance might influence their financial decisions.
3. Highlight when you might benefit from Inheritance Tax planning
Inheritance Tax (IHT) is a tax on your estate after you pass away if its value exceeds certain thresholds. As the value of your assets is likely to change during your lifetime, it can be difficult to assess whether IHT is something you might need to consider. In addition, allowances and exemptions will be dependent on your personal circumstances, so seeking tailored advice may be useful.
A cashflow model could highlight if your estate may be liable for IHT and potentially help you find ways to reduce the bill.
4. Support creating a care plan
Planning for care costs can be challenging. However, it may be an important part of your long-term plan.
As people live longer lives, the number of individuals who require support is expected to rise. Indeed, according to research from the Joseph Rowntree Foundation (22 August 2024), the number of people who could benefit from support with daily activities will rise from 1.7 million in 2015 to 3 million in 2040.
A cashflow model could help you assess how you’d pay for care costs should you need support later in life.
5. Test “what if” scenarios
One challenge when making decisions is understanding the long-term impact. A cashflow model could allow you to test “what if” scenarios and assess the impact they might have on your assets.
For instance, you may use a cashflow model to answer questions like:
Being able to visualise the effect of these decisions on your wealth might give you the confidence to move your plans forward or identify potential gaps before you act.
If you’d like to create an estate plan or review an existing one, please contact us.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning, tax planning or cashflow modelling.
Conflict in the Middle East caused market volatility throughout March 2026. Find out what other factors may have affected your investments.
While the ongoing uncertainty may feel unsettling for investors, remember that your strategy reflects your long-term goals and considers periods of volatility. Investment returns cannot be guaranteed, and the value of your assets may fall as well as rise.
On Saturday, 28 February, the US and Israel began strikes on Iran, which led to markets falling when they opened on Monday 2 March.
The FTSE 100 recorded its biggest loss since November 2025 when it fell 1.2%, with airlines, luxury goods makers, and banks particularly affected. In contrast, defence stocks increased, including the UK's BAE Systems, which was up 7% at the start of trading.
It was a similar picture in Europe. The main indices in France, Germany, Italy, and Spain were down 2.2% or more. When markets opened in the US, the Dow Jones Industrial Average and the wider S&P 500 both dropped 1%.
As the Middle East is a major oil-exporting region, conflict there led to prices rising. Deutsche Bank stated Brent crude was up 8.4%, though it added it was only the 38th largest oil spike since 1990.
The volatility continued on 3 March, with the FTSE 100 recording the biggest daily loss in 11 months when it fell 2.75%. Germany’s DAX (-3.6%), France’s CAC 40 (-3.5%), and Italy’s FTSE MIB (-3.9%) also suffered losses.
Asia-Pacific markets weren’t immune to the effects of the war in Iran either. Japan’s Nikkei index fell 3.6%, and South Korea’s KOSPI was down 12% on 4 March due to concerns about shipping through the Strait of Hormuz, a key sea passage for trade, particularly for oil.
On 11 March, the International Energy Agency proposed the largest release of oil reserves in history to bring crude prices down. The news led to Asian shares climbing, with the main indices in Japan and South Korea rising by 1.4%.
However, energy fears continued to influence European markets. On 16 March, the FTSE 100 was down by 1.9%, and the index’s 2026 gains were wiped out on 20 March.
Markets briefly rallied on 23 March following news that negotiations would take place between the US and Iran. However, there were conflicting reports that led to confusion. Despite this, US markets improved, with the Dow Jones up 2%, and construction equipment firm Caterpillar leading the way with a 4.4% rise.
The Office for National Statistics said the UK economy stagnated in January 2026. The data suggests the economy was weakening even before the effects of the conflict in the Middle East were felt. Furthermore, inflation in the 12 months to February 2026 was 3%, stubbornly sticking above the Bank of England’s (BoE) 2% target.
The British Chambers of Commerce commented that the UK is stuck in a “low-growth pattern”, after the 2026 GDP forecast was downgraded from 1.2% to 1%. The organisation said the revised estimate reflects weak productivity, subdued investment, and cautious consumer spending.
At the start of March 2026, Chancellor Rachel Reeves delivered the government’s Spring Statement. In it, she said inflation would fall faster than expected, economic growth would pick up in 2027 and 2028, and there was headroom in the budget.
However, the calculations were made before the conflict in the Middle East began, which is expected to affect the economic outlook.
For instance, rising energy prices could influence inflation. Indeed, the Office for Budget Responsibility estimated the Iran war would add 1% to UK inflation this year. In turn, high inflation may lead to the BoE increasing interest rates, which would place pressure on consumers and businesses.
Data from S&P Global’s Purchasing Managers’ Index (PMI) was positive for the manufacturing and service sectors.
In February 2026, the manufacturing PMI continued to grow, recording a reading of 51.7 – a figure above 50 indicates growth – and a rise in business both at home and abroad. The service sector fell slightly compared to the previous month to 53.9, but still shows growth.
In contrast, the construction sector fell to 44.5 in February, which marked 14 consecutive months of contraction.
Across the eurozone, the annual inflation rate was 1.9% in February 2026, up from 1.7% a month earlier, and very close to the European Central Bank’s (ECB) 2% target.
The ECB opted to hold interest rates in March, but warned that uncertainty could lead to higher inflation and pose risks to economic growth, which might lead to higher interest rates in the coming months.
The European Commission consumer confidence survey highlights this fear among consumers, with the reading falling amid worries that the Iran war could drive up energy costs.
The S&P flash report on output in the eurozone fell to 50.5 in March, down from 51.9 in February. The reading represents a 10-month low, and it is close to the 50 mark, which signals stagnation.
As expected, inflation in the 12 months to February 2026 remained stable at 2.4%.
However, data from the Bureau of Labor Statistics was less positive. The US economy lost 92,000 jobs in February, which could be a sign that the market is cooling, and the ongoing conflict might lead to businesses taking a more cautious approach in the coming months.
A consumer sentiment survey carried out by the University of Michigan indicates that the Iran war is already influencing how confident people feel about their financial future. The reading fell from 56.6 in February to 55.5 in March.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Next year, a significant change to how pensions are treated when calculating Inheritance Tax (IHT) could mean more families become liable for the tax. Here’s what you need to know to understand if your estate could be affected and how you might mitigate a potential bill.
Currently, pensions are usually outside your estate for IHT purposes. As a result, your pension might provide a tax-efficient way to pass on wealth to your loved ones.
This will change on 6 April 2027, when most unused pension funds and pension death benefits will be included in IHT calculations.
According to HMRC (25 November 2025), the changes mean around 10,500 estates will become liable for IHT where previously they would not have been. In addition, it’s estimated that around 213,000 estates will now face a higher IHT bill.
Even if you have an existing estate plan in place that considers IHT liability, it may be worthwhile reviewing it in light of the changes.
Please note, this information is based on our current understanding of HMRC rules and expected regime change. How IHT rules affect your will be based on your personal circumstances, and they could be subject to change in the future.
To understand whether you’ll be affected by the IHT changes, you need to start with when you pay IHT.
Roughly 1 in 20 estates are liable for IHT, and if the total value of your estate, which includes property, savings, investments, and personal possessions, is under certain thresholds, no IHT will be due.
In 2026/27, the nil-rate band is £325,000. If the value of your estate is below this threshold, it won’t be liable for IHT.
In addition, the residence nil-rate band is £175,000 in 2026/27. Most estates can use this allowance if they leave their main home to a direct descendant.
However, the residence nil-rate band may taper if your entire estate is worth more than £2 million. For every £2 that the value of your estate exceeds the £2 million threshold, the residence nil-rate band will reduce by £1. As a result, the allowance will be completely withdrawn if the value of your estate is more than £2.35 million
If you’re married or in a civil partnership, you can pass on your entire estate to your partner without the assets being liable for IHT, and you can also pass on unused allowances. As a result, a couple planning together may be able to pass on up to £1 million before IHT is due.
While the threshold may seem high, once you factor in large assets, such as your pension or property, it may be easier to exceed it than you expect.
Furthermore, the IHT thresholds are frozen until at least April 2031. So, if the value of your assets rises, your estate might be pushed past the IHT threshold without you realising.
The good news is that there are often steps you can take to mitigate an IHT bill, including when the rules change and your pension is added to the calculations.
1. Spend your pension
Perhaps the simplest way to avoid paying IHT on your pension is to spend it. After working hard to save for this chapter of your life, you could find you’re in a position to make some indulgent purchases, from exotic holidays to golfing equipment.
Remember that your pension might need to provide an income for the rest of your life, and it’s not uncommon for a retirement to span several decades. So, it’s important to balance spending now with long-term financial security, which a financial plan may help you achieve.
2. Purchase an annuity
If you have a defined contribution pension, you can access it in several ways. One option that could be effective from an IHT perspective is purchasing an annuity.
An annuity is a financial product you buy that then provides an income for the rest of your life. In some cases, the income provided may increase in line with inflation or a portion may continue to be paid to your partner if you passed away first.
You can use all or part of your pension to purchase an annuity. As the money is taken out of your pension, it’s effectively removed from your estate, which might reduce IHT liability. However, there is a risk that you’d pass away before getting the money back through the income.
Buying an annuity is often an irreversible decision, so it’s important to weigh up all your options when accessing your pension.
3. Pass on pension wealth to loved ones during your lifetime
If passing on wealth to loved ones is important to you, you could do so during your lifetime.
Gifting wealth from a pension could support your beneficiaries and potentially reduce an IHT bill by reducing the value of your estate.
However, not all of your gifts are considered immediately outside of your estate when calculating IHT. In some cases, gifts may be included in the calculations for up to seven years after they are given; these are known as “potentially exempt transfers”.
Some gifts are immediately outside of your estate for IHT purposes, making them useful if you want to mitigate an IHT bill. In 2026/27, they include:
Another factor to consider is how you’ll be taxed when withdrawing money from your pension. If your total income exceeds the Personal Allowance (£12,570 in 2026/27), withdrawals may be subject to Income Tax.
As a result, large withdrawals for gifts could be taxed and potentially push you into a higher tax band.
Again, it’s important to consider your long-term financial security. Gifting too much could leave you in a financially vulnerable position later in life. Making gifts part of your wider financial plan could give you confidence in your finances now and in the future.
There are other ways you might reduce or mitigate a potential IHT bill, such as passing on wealth through a trust or leaving a portion of your estate to charity.
Please get in touch to talk about your objectives and how we could help you create an estate plan that’s tailored to your needs.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate Inheritance Tax planning or trusts.
More than half of UK pension savers are also building up retirement savings outside their pension, according to a MoneyAge article (22 December 2025). As pensions provide some useful benefits when saving for retirement, these savers could be missing out.
The survey found that people saving for retirement outside a pension were using a mix of cash savings, Stocks and Shares ISA, buy-to-let property, and other investments with the aim of building long-term wealth.
For some people, these options could be appropriate for their financial circumstances and retirement goals. However, they might also have overlooked the benefits of using a pension.
1. Your employer will contribute to your pension
If you’re an employee aged over 22 earning more than £10,000 a year, your employer must auto-enrol you into a pension. If you don’t opt out, your employer will need to contribute to your pension on your behalf at a minimum rate of 3% of your pensionable earnings, though they may contribute a higher percentage.
Should you choose not to save through a workplace pension, you’ll miss out on this additional money that could support you in retirement.
2. Pension contributions benefit from tax relief
To encourage workers to save for retirement, the government offers tax relief on pension contributions. In effect, this means some of the money you’ve paid in Income Tax is added to your retirement savings.
Pension tax relief is provided at your marginal tax rate. Usually, the basic rate is automatically added by your pension provider, and you can use a Self Assessment tax return to claim the remaining amount if you’re a higher- or additional-rate taxpayer.
In 2026/27, the amount you can contribute to a pension without facing a charge is usually £60,000 (the Annual Allowance) or 100% of your annual earnings, whichever is lower. If you’ve already taken an income from your pension or you’re a high earner, your pension Annual Allowance could be as low as £10,000.
It’s important to note that tax relief and other allowances may be dependent on your personanal circumstances and are subject to change.
3. Your pension is usually invested
The MoneyAge article notes that people are twice as likely to save for retirement in cash (43%) outside a pension compared to a Stocks and Shares ISA (21%).
While cash can be tempting to avoid exposure to investment risk, the interest from a savings account could be lower than investment returns. As many people save for retirement over a long-term time frame, low-yielding cash accounts could mean they retire with significantly smaller pots than they would have if they had invested.
Normally, the money you deposit into a pension will be invested with the aim of delivering long-term growth. While returns cannot be guaranteed and values may fall as well as rise, investing might provide an opportunity for growth that outpaces inflation or cash interest.
4. Investments held in a pension aren’t liable for Capital Gains Tax
When investments aren’t held in a tax-efficient wrapper, such as a pension, the gains you make when you dispose of them could be liable for Capital Gains Tax (CGT). As a result, a pension could be an effective way to invest for your retirement.
Again, tax liability may be affected by your personal circumstances and the tax regime may be subject to change in the future.
There are times when using a pension to save for retirement might not be the most appropriate option.
For example, if your financial circumstances could mean you need access to the money in the short or medium term, a pension would lock it away. As a result, you might feel more comfortable holding the money outside of a pension.
Alternatively, you can’t usually access your pension savings until you turn 55 (rising to 57 in 2028). So, if you’re hoping to retire sooner than that, you might need to establish savings outside of a pension to bridge the gap, however any structure outside of your pension would not attract tax relief.
Many people in retirement will draw from multiple sources to create an income stream that suits their needs and financial situation. Contributing to a pension doesn’t mean you can’t build retirement wealth elsewhere or vice versa.
If you’re unsure about your options for saving for retirement, please get in touch. We can assess if a pension might be right for you, as well as explore the alternatives.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Workplace pensions are regulated by The Pensions Regulator.
Planning your finances without clear goals is like setting off in your car without a destination – you might be able to keep moving, but you can’t be sure you’re heading in the right direction.
That’s why goal-setting is at the heart of effective financial planning. However, not all goals are created equal.
You can probably call to mind a time you set a resolution or objective with every intention of keeping it, only to give up after a few weeks. This probably had little to do with your self-discipline and commitment, and a lot to do with how you structured your goals.
Did you have a laser focus on what you wanted to achieve and why? Or were you working towards vague, overly ambitious intentions that you were only too glad to abandon?
The truth is that setting goals you’ll actually stick to, and that move you closer to where you want to be, is a skill like any other.
Thankfully, there’s a ready-made goal-setting framework that could transform your approach to financial planning. If you want to turn vague intentions into clear plans, consider following the five steps of SMART goal-setting – specific, measurable, achievable, relevant, and time-bound.
Download your copy here: SMART goals: 5 steps to effective financial planning
If you’d like to know more about how we can help you plan to achieve the goals that matter to you, please get in touch.
Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing (March 2026) and is subj
