Increasingly, UK savers are losing track of their pensions. In October 2024, research by Pensions UK found that the total value of lost pension pots had risen by 60% since 2018.
Losing track of your pensions can be costly. Across the 3.3 million pension pots considered lost, the average fund value is £9,470 – rising to £13,620 for those aged 55 to 75.
By consolidating multiple workplace and private pensions into fewer schemes – or even just one – you could make it easier to track and manage your retirement savings. Additionally, bringing multiple pots together may help you grow your funds more efficiently and reduce your administration fees.
Generally, you can consolidate any defined contribution (DC) schemes (Personal Pensions), regardless of whether they are workplace or private pensions. However, pension consolidation may not always be appropriate, with a variety of fees, rules, and the potential loss of benefits to consider.
Read on to discover three reasons why pension consolidation could boost your retirement income, and when consolidation might not be appropriate.
By bringing more of your pension pots together under one provider with a single set of rules, features, and benefits, you may be able to simplify your pension management.
According to an August 2022 study from Standard Life, the average person in the UK changes jobs every five years. As a result, people often accumulate multiple workplace pensions throughout their working life – making it easy to lose track over the years.
With fewer pension providers, policy details, and fund values to keep track of, you can reduce the administrative burden of managing multiple pensions. This helps you maintain a clear view of your total retirement funds and monitor how well your investments are performing, while reducing the risk of losing money in forgotten pots.
With a greater understanding of how much you currently have, you can more easily determine how much you need to grow your funds to achieve your retirement goals.
Generally, investment options vary from one pension to another. While some older pensions may be limited to investment funds managed by the provider, others could offer a wider choice and more flexibility for you to decide where your pension is invested.
Some schemes may perform better than others, delivering a higher rate of return on your pension savings. Additionally, having a larger pot may present more investment opportunities, with some requiring a minimum investment size.
Plus, since your investment returns compound over time, consolidating your pensions could enable them to grow more quickly.
Indeed, by moving more of your funds into a pension that offers potentially higher returns, you could accelerate your pension’s growth. According to HM Treasury in May 2025, the average earner could boost their retirement savings by £6,000 through consolidating their funds.
When you have several pension pots, you could unnecessarily pay duplicate fees. Each scheme generally comes with varying administrative charges, ranging from less than 0.5% to more than 1% of your fund. Typically, older pensions are likely to have higher fees.
While individual fees may sometimes appear nominal, the amount you’re charged is likely to grow as time passes and your fund value increases. Considering you could be paying such fees across multiple schemes and over several years, the total charges paid over your lifetime can be significant.
However, some schemes may also charge an exit fee. For pensions set up before 31 March 2017, you could be charged up to 10% of your fund. If you set up your scheme after this date, or are aged 55 or over, exit fees are capped at 1%.
As a result, consolidating your pension pots can boost your retirement savings by reducing your costs. However, choosing which plan to transfer your funds into requires careful consideration.
Consolidation isn’t appropriate for everyone. In some cases, partial consolidation can be a good option, whereby you bring some of your funds together while leaving other pots separate. For some people, consolidation might not be necessary at all.
Smaller pension pots
If you have pots worth less than £10,000 and plan to withdraw from them before retirement, it could be worth leaving them separate from your other funds because of the “small pots exemption”.
As of 2025/26, you can generally draw down up to three of these pots in your lifetime without triggering the Money Purchase Annual Allowance (MPAA). This allowance permanently reduces the amount you can pay into your pension tax-efficiently from £60,000 to £10,000 a year.
Defined benefit schemes
If you have a defined benefit (DB) pension (Final Salary Scheme), consolidation is unlikely to be a sensible option. Unlike DC schemes, DB pensions generally offer a guaranteed retirement income based on your salary and years of service with your employer.It is unlikely to be in your interest to consider moving a final salary scheme.
In fact, you may be required to seek advice from a qualified financial adviser before transferring funds out of a DB scheme that contains over £30,000.
Your current workplace pension
If you and your employer are still contributing to a workplace pension, it may be worth keeping that scheme open. By closing it to consolidate with other funds, you’ll likely surrender your employer contributions, which may prove significant over time.
Protecting scheme benefits
In some cases, your pension schemes may offer valuable guarantees or benefits that are more common with older schemes, such as:
If it’s not possible to consolidate your other pensions into your preferred scheme – for example, if your employer is contributing to a different pot – it might be worth leaving your funds where they are.
While pension consolidation may deliver a range of administrative and financial benefits, creating a strategy for bringing multiple pots together can be complex.
There are a variety of rules, fees, benefits, investment opportunities, and personal factors to consider before consolidating. In fact, in September 2025 IFA Magazine reported that poorly informed pension transfers made in the year to 30 June 2025 may have cost savers £1.7 billion.
By seeking guidance from a qualified financial planner, you could help determine the most effective consolidation strategy for your needs and circumstances. Get in touch to learn more about how we can support you in boosting your retirement funds.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pensions Regulator.
The Financial Conduct Authority does not regulate tax planning.
Traditionally, you’d go from full-time employment to retirement on a set date. Now, more workers are embracing retirement flexibility and choosing to phase gradually into the next stage of their lives. Indeed, a survey published in September 2024 by WTW found that 49% of UK workers aged over 50 are already phasing into retirement or want to do so in the future.
Alongside calculating the income your pension could provide and planning a retirement bucket list, you might want to dedicate some time to thinking about how you want to retire.
Over the next few months, we’ll explore key considerations for those interested in phased retirement, including the financial implications.
Read on to find out why more people are phasing into retirement and how you might do it.
There are many reasons why someone might choose to phase into retirement, and one factor that’s playing an important role in the trend is longer life expectancy.
According to data published by the Office for National Statistics in February 2025, the average 55-year-old man has a life expectancy of 84. For a 55-year-old woman, it’s 87.
So, if you were to retire in your mid-50s, on average, you’d spend around three decades in retirement. For some people, giving up work completely with decades ahead of them can feel daunting, and a phased approach could better suit their goals.
Among the other benefits of phasing into retirement are:
If phasing into retirement sounds like it could suit you, there’s more than one option to explore. Here are four ways you could phase into retirement.
1. Reduce your working hours
If you’re happy in your current role but want to benefit from increased flexibility, reducing your hours could help you achieve the work-life balance you’re looking for.
Whether you shorten the working day or work a three-day week, you could increase your free time to spend on activities you’re interested in.
2. Move to a less demanding role
As you near retirement, you might want to adjust your priorities and take on a less demanding role to focus on the aspects of the job you enjoy. This option could help reduce stress while remaining connected to a wider team.
When you’re weighing up your options, be sure to set out what’s right for you. Do you want to move into a position that requires less physical labour, or take a step back from managing people?
3. Take on freelance or consulting work
If you want the freedom to set your own schedule, freelance or consulting work could be an option worth exploring. As you’ll be in control, you can create a work-life balance that’s right for you or focus on projects you’re passionate about.
If you’ve thought about starting your own business in the past, a phased retirement could provide an opportunity to test your entrepreneurial skills. You might turn a hobby into an income stream or continue to provide support for businesses you work with in your existing role.
4. Explore volunteering
If you’re in a financial position to stop working but aren’t ready to give up the structure and social interaction it provides, you could benefit from volunteering.
The great news is that there are thousands of volunteering opportunities across the country, helping you to find a role that suits your skills and interests. Whether you choose to lend a hand at a local food bank or mentor young professionals, you could have a meaningful impact on other people and your community.
A phased retirement could offer you a chance to strike a work-life balance that suits you. If you’d like to talk about how you could phase into retirement and its potential effect on your finances, please get in touch.
Next month, read our blog to find out more about the wellbeing and financial benefits of phasing into retirement.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. 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. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Thinking about what might happen after you die isn’t easy. It’s hard to imagine the world simply continuing. That’s likely one reason why so many people put off writing a will for “another time” or decide to “sort it later”. But the reality is, none of us know when we’ll die.
Having a will in place means your estate will be dealt with according to your wishes. It will also spare your loved ones from having to deal with working out how to manage your affairs while they’re still navigating their grief. You can cover important issues such as:
A Lasting Power of Attorney (LPA) is another important consideration in your later-life planning. While we all hope to maintain good physical and mental health, you just don’t know what’s around the corner. An LPA means that you know people you trust will be making decisions about key areas of your life, such as your healthcare and finances.
In this guide, you can find out more about how making a will and setting up an LPA can give you and your loved ones peace of mind about the future.
Download your copy here: 12 practical reasons to write a will and name a Lasting Power of Attorney
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 and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.
While global government policy – particularly US trade tariffs – continued to influence the value of investments in August 2025, many markets experienced less volatility compared to the start of the year. Read on to discover what factors may have affected the performance of your investments in August 2025.
On 31 July, Donald Trump, the US president, signed an executive order imposing reciprocal tariffs of up to 41% on certain trading partners. The effect of this influenced market movements at the start of August.
On 1 August, Asian stock market indices, which track the performance of a selected group of stocks, fell. South Korea’s KOSPI was down 3%, while Japan’s Nikkei decreased by 0.4%.
The uncertainty also affected European and US markets. Even though the UK has a trade deal with the US, the FTSE 100 was down 0.5%, while the Dow Jones (-1.1%) and S&P 500 (-1.2%) both fell when Wall Street opened in the US.
There was good news for investors in the UK market on 6 August. The FTSE 100 reached a new closing high after it increased by 0.24%. Among the biggest risers were insurer Hiscox (9.4%), precious metal producer Fresnillo (8.8%), and drinks company Diageo (4.2%).
Ahead of US-Russia talks about the war in Ukraine, European stocks cautiously increased on 11 August. The FTSE 100 was up 0.3%, Germany’s DAX and France’s CAC both edged up almost 0.2%, and Italy’s FTSE MIB increased by 0.45%.
The MSCI’s broad All Country World Index, which tracks stocks from 23 developed and 24 emerging markets, hit an all-time high on 13 August. One of the driving factors was the hope that the US will cut its base interest rate in September.
Further speculation that Russia and Ukraine would strike a peace deal fuelled European stock markets on 19 August. Europe’s Stoxx 600 index increased by 0.6%.
In the first half of 2025, European defence companies saw stocks increase due to rising tensions. With investors hoping for de-escalation, defence stocks, including BAE Systems (-3.6%), Rheinmetall (-4.2%), and Thales (-3.5%), fell.
Despite official data showing inflation was higher than expected in the UK, the FTSE 100 hit another record high on 20 August following a jump of 0.67%.
Inflation in the UK continued to rise in the 12 months to July 2025. Official data shows it was 3.8% and the highest annual reading since early 2024.
Despite persistent high inflation, the Bank of England opted to cut the base interest rate by a quarter of a percentage point to 4%. However, the central bank noted that inflation could slow the pace of further cuts.
Overall business activity is improving, according to a Purchasing Managers’ Index (PMI), which provides insight into economic conditions.
S&P Global’s August PMI recorded the strongest rise in UK business activity in the year to date, with a reading of 53 (a figure above 50 indicates growth) compared to 51.5 in July.
However, PMI data wasn’t as positive for the construction sector. In July, the reading was 44.3, suggesting contraction at the fastest pace in five years. Builders reported a decline in housing projects, which could suggest the government is struggling to hit housebuilding targets.
A report from the British Chambers of Commerce demonstrates the effects of trade tariffs. Goods exported to the US slumped by 13.5% in the second quarter of 2025. The figure is the lowest level in three years, when the Covid-19 pandemic severely disrupted trade.
There was some good news for investors from British fossil fuel giant BP.
BP revealed the largest oil and gas discovery in 25 years off the coast of Brazil. The news was followed by a statement from the company, which said, subject to board approval, it would raise quarterly dividends by at least 4%.
Eurozone inflation remained stable at 2%, though it varied significantly across the bloc from Cyprus at 0.1% to Romania at 6.6%.
PMI figures from Hamburg Commercial Bank paint an optimistic picture for the EU economy.
As the largest economies in the EU, the performance of companies in Germany and France is important, and both strengthened in August. Germany’s PMI improved for the third consecutive month with a reading of 50.9. While France is just below the 50 mark, which indicates growth, with a reading of 49.8, it’s the highest figure so far in 2025.
Across the eurozone, PMI data shows the manufacturing sector increased production at the fastest pace in more than three years. The reading suggests businesses may be feeling more optimistic as uncertainty around trade tariffs settles.
Economists predicted that US inflation would increase, but it remained stable at 2.7% in the 12 months to July.
Weakening demand for US exports due to tariffs has been linked to manufacturing slowing and the trade deficit narrowing.
A PMI conducted by the Institute of Supply Management shows new orders fell in July. Some companies blamed the disruption and confusion caused by changing trade policy.
In addition, the US trade deficit narrowed as companies rushed to import goods into the US before tariffs were applied. The gap between exports and imports was $60.2 billion (£44.5 billion) in June 2025 after a decline of $11.5 billion (£8.5 billion) when compared to May 2025.
There was some good news in the form of PMI data. According to S&P Global, US business activity hit an eight-month high.
US company OpenAI, the group behind ChatGPT, is in talks about a share sale that would value the company at $500 billion (£370 billion). The company isn’t listed on the stock market, and the talks are focusing on a potential sale for current and former employees, who could potentially make large returns by selling the shares on the secondary market.
China’s exports increased by 7.2% year-on-year in July 2025. The figure was higher than expected and is due to manufacturers taking advantage of a trade war truce between China and the US.
However, while exports increased in July, the ongoing trade war is harming China’s economy. Chinese industrial output increased by 5.7% in July, the slowest rate since November 2024 and below the 6% expected.
The largest automaker in the world, Japanese company Toyota, warned it would take a $9.5 billion (£7 billion) hit from Trump’s tariffs. As a result, it has cut its operating profits for the current financial year from £19.2 billion to £16 billion.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
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. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Taking out a new mortgage deal could represent a shift in your financial commitments. So, reviewing whether your financial protection is still appropriate could ensure you have a vital safety net should you face a shock.
Read on to learn how financial protection can provide security in unexpected situations, and what to consider when taking out new cover.
Financial protection could provide a much-needed cash injection when you or your loved one experiences a financial shock.
Indeed, in 2024, insurers paid out a record £8 billion in financial protection claims, according to data released in July 2025 by the Association of British Insurers (ABI).
There are several types of financial protection that you might want to weigh up as a homeowner. The three main options are:
1. Income protection
If you’re unable to work due to an illness or accident, income protection would pay you a regular income until you return to work, retire, or the term ends. This income is usually a portion of your salary, such as 60%.
Income protection could help you cover financial commitments, including mortgage repayments, if your regular income stops. The ABI figures show the average amount paid through income protection was £25,133.
2. Critical illness cover
If you’re diagnosed with a covered critical illness, this form of financial protection would pay you a lump sum. According to the ABI statistics, the average amount claimed was £68,735.
You can use the lump sum however you wish. So, you might use it to cover your regular outgoings while you take time off work, adapt your home if necessary, or pay off your mortgage.
3. Life insurance
Life insurance would pay out a lump sum to your beneficiaries if you passed away during the term. It could provide your loved ones with financial security while they are grieving.
You can choose the level of cover to suit you and your family. For example, you might opt for an amount that would pay off your mortgage to reduce your family’s financial commitments.
The ABI figures show 96.5% of life insurance claims were upheld in 2024, and the average claim was for £79,703.
If you’ve taken out a new mortgage, review your current financial commitments and consider when and how financial protection could benefit you.
For example, if you’re a homeowner with limited savings, income protection could be a valuable option.
According to a May 2025 article in Cover Magazine, 14% of mortgage holders would immediately struggle to pay their mortgage after income loss. As a result, they could be at risk of losing their home if they haven’t taken other steps to create an income stream.
Alternatively, if you have a family that relies on your income, life insurance may be a priority to protect your loved ones.
In July 2025, a Which? article noted that more than half of people in the UK don’t have life insurance in place, potentially leaving households at risk of financial hardship if they were to die unexpectedly.
Depending on your needs, you might find that you’d benefit from taking out more than one type of financial protection.
Before you take out new financial protection, check these three areas. They could affect the type and level of cover that’s right for you.
1. Review existing cover
Take some time to review what cover you already have in place.
Even if you haven’t taken out financial protection directly, you could still have some cover. For instance, if your employer provides a death in service benefit, you might not need to take out life insurance as well.
2. Check your employer’s sick pay policy
In 2025/26, Statutory Sick Pay is just £118.75 a week and is paid for up to 28 weeks. As a result, most families would struggle if they relied on this alone, making income protection an attractive option.
However, many workplaces offer an enhanced sick pay policy, so it’s worth reading your contract or employee handbook. Check what portion of your salary you’d receive if you were unable to work and how long it would be paid for.
You could select income protection to complement your sick pay. For instance, if you’d receive a salary for six months, you could select income protection with a six-month deferment to reduce premiums.
3. Assess your other assets
Look at your wider finances when assessing financial protection – what assets could you use if you faced a financial shock?
If you have a substantial emergency fund, you may reduce the level of cover. However, if your assets are earmarked for other purposes, like retirement, you might want to consider the effect depleting them now could have on your future financial security.
As part of your long-term plan, we can work with you to create a safety net you and your loved ones can rely on, including taking out appropriate financial protection. Please contact us to arrange a meeting.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Note that life insurance and financial protection plans typically have no cash in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Your midlife can be an exciting time; you may have ticked off some goals or bucket list items and are looking forward to what the future holds. Yet, it might also present some new challenges. Arranging a financial midlife MOT could help you overcome obstacles and feel confident as you prepare for the next chapter.
While you might have a better understanding of what you want to get out of life than when you were younger, finances can often become more complex, making it difficult to understand what’s possible. A financial midlife MOT gives you a chance to examine your finances now and calculate if you’re on track to reach your aspirations.
Here are five common challenges a financial MOT could help you navigate.
As you start to consider retirement and your future, you may opt to merge finances with your partner if you don’t already.
Bringing together your finances can be challenging at any time, but particularly when you’re older, as you may both already hold assets, such as pensions or property. Working with a financial planner could help you take stock of your assets and start to understand how they might form part of your financial plan as a couple.
As well as juggling two sets of assets, you might have different views on financial priorities and long-term goals.
As your financial plan places your aspirations at the centre, a midlife MOT could help you clarify your priorities and balance them with your partner’s.
66% of people aged between 45 and 49 feel unprepared for retirement, according to research from LV published in June 2025.
Retirement might feel years away, but it’s a milestone that benefits from early preparation. The decisions you make now could affect your income in your later years, so weighing up your options is essential.
A financial midlife MOT can include reviewing your pensions and other assets you intend to use in retirement to calculate if you have “enough” to live the retirement lifestyle you’re looking forward to.
You could find you’re already on track and enjoy peace of mind as a result. If you discover there’s a potential shortfall, knowing this sooner puts you in a stronger position to bridge the gap, and a financial plan highlight the steps you might take.
While you might no longer have young children to care for, you could find that you still have care responsibilities during your midlife.
In fact, according to December 2024 research from Legal & General, 1 in 6 middle-aged people support other adults financially, such as grown-up children or elderly parents.
If this isn’t something you’ve considered as part of your financial plan, it could make it harder to budget now and may affect your financial security in the future.
It’s not just your finances that care duties may affect. 1 in 7 midlifers said they provide unpaid care, with hours equivalent to a part-time job. Around half said they feel overwhelmed by their weekly commitments. This can take a toll on your overall wellbeing.
A financial plan that’s focused on what’s important to you could help you balance new responsibilities with your personal goals. For example, you might pay for a carer a few times a week so you’re still able to attend social clubs that you enjoy.
While you might have ticked off some financial commitments, such as paying your mortgage or children’s school fees, it’s still important to ensure you could withstand a financial shock. Your income stopping or facing an unexpected bill often has the potential to derail your plans.
A midlife review gives you the opportunity to evaluate your financial security and assess how you’d cope with an unexpected event.
You might check if you hold enough cash in your emergency fund or review your financial protection to see if you have an adequate safety net. While you hope never to need it, a financial safety net can provide reassurance and protection if the unexpected happens.
It’s easy to think that you don’t need to consider how you’ll pass on assets to your loved ones yet. However, it’s impossible to know what’s around the corner, and there may be benefits to passing on wealth during your lifetime rather than waiting to leave an inheritance.
Putting together an estate plan can be difficult. Not only are you bringing together all your assets and considering how circumstances may change in the coming decades, it’s also an emotional topic. So, if it’s something you’ve been putting off, you’re not alone.
It may be daunting at first, but your estate plan allows you to take control of your legacy. As your financial planner, we can help you create an estate plan that gives you long-term security while supporting the people who are important to you.
Get the most out of your life by feeling confident about your finances. Please contact us to talk to one of our team members and arrange a financial review.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
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. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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 tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Note that life insurance and financial protection plans typically have no cash in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
The Financial Conduct Authority does not regulate estate planning.
From April 2027, pensions are expected to fall within your estate and could be liable for Inheritance Tax (IHT). That date might seem far away, but the policy change has the potential to significantly affect your estate plan, so thinking about it now could be useful.
While the policy change is still in the initial stage, the government has signalled that it intends to move forward with the plans.
Under current rules, your pension usually falls outside of your estate when calculating a potential IHT bill. As a result, pensions are often used in tax-efficient strategies to pass on wealth to loved ones.
The inclusion of pensions may mean some estates might need to consider IHT for the first time, or that estate plans need to be updated.
In 2025/26, the nil-rate band is £325,000. If the total value of all your assets, including your pension from April 2027, exceeds this threshold, your estate may be liable for IHT.
The good news is that there are often steps you can take to reduce an IHT bill, which an estate plan could help you identify.
The current proposals suggest most pensions are set to fall within the IHT net from April 2027, including defined contribution pensions, defined benefit pots, workplace pensions, personal pensions, and self-invested personal pensions.
However, there are some exceptions, including pensions that provide an income during your retirement years and certain types of annuities.
In addition, if your pension has a death in service benefit, which may provide your spouse, civil partner, or dependent children with a lump sum or regular income if you pass away, this is expected to be outside of your estate for IHT purposes.
Under current rules, beneficiaries don’t usually pay IHT on inherited pensions, but they may pay Income Tax in some circumstances. Assuming this doesn’t change, it could mean inherited pensions are subject to double taxation as they’ll be liable for both IHT and Income Tax.
The changes could significantly reduce how much you leave behind for loved ones, and could mean that passing on wealth through a pension no longer makes sense from a tax perspective.
If you’d previously planned to use other assets to fund your retirement so you could pass on your pension tax-efficiently, your wider financial plan may need to change as a result of the incoming policy.
For example, you might choose to deplete your pension during your lifetime and pass on different assets to loved ones now or in the future. Here are three alternative options you might want to consider.
1. Gift assets to loved ones during your lifetime
One option is to pass on assets now. This could provide support for your loved ones when they need it most, such as when they’re buying their first home or are paying a child’s school fees.
However, there are two key things to be aware of before you start gifting assets.
First, review your financial plan to ensure you’ll still be financially secure in the long term after gifting assets.
Second, not all gifts are immediately outside of your estate for IHT purposes. Some may be considered part of your estate for up to seven years after they were gifted; these are known as “potentially exempt transfers”.
Gifts that are immediately considered outside of your estate include:
So, you might want to make gifting part of your financial plan to make the most of gifts that are immediately exempt from IHT.
2. Place assets in a trust
A trust is a legal arrangement where assets are held on behalf of beneficiaries. For IHT purposes, you may use a trust to remove some assets from your estate. In some cases, you might still retain control or benefit from the assets.
There are several different types of trust, and it’s important to ensure yours is set up correctly, as it may not be possible to retrieve assets once they have been placed in a trust. Seeking professional legal and financial advice could help you assess if a trust is the right option for you before you proceed.
3. Take out life insurance to cover an Inheritance Tax bill
A life insurance policy won’t reduce the amount of IHT your estate is liable for, but it can provide your loved ones with a way to pay the bill.
You’ll need to pay regular premiums to maintain the cover. When you pass away, your nominated beneficiary will receive a lump sum, which they can then use to pay the IHT due. It could reduce stress for your loved one at a difficult time and help ensure your estate is passed on intact.
It’s important that the life insurance is written in trust. Otherwise, the payout could be considered part of your estate and lead to a larger IHT bill.
Whether you’re starting from scratch or have an existing estate plan that you’d like to review, we can help you assess what the upcoming changes mean for you and the legacy you want to leave behind. We can work with you on an ongoing basis to ensure your estate and wider financial plan continues to reflect current policy and your needs. Please get in touch to talk to us.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate Inheritance Tax planning or trusts.
Almost half of Brits doubt the State Pension will exist by the time they retire, according to a PensionsAge report published in July 2025. While scrapping the State Pension may not be on the cards yet, there are suggestions that significant changes, which may affect your retirement, could be introduced.
In 2025/26, the full new State Pension is £230.25 a week and can be claimed from age 66. Even though the State Pension may not be enough to cover all your retirement expenses, it often provides a reliable base income. So, changes could affect your long-term financial security.
The State Pension is the second-largest item on the government budget after health, and the cost of maintaining it has soared.
According to a July 2025 report from the Office for Budget Responsibility (OBR), spending on the State Pension has increased from 2% of GDP in the mid-20th century to around 5% today, the equivalent of £138 billion. By the early 2070s, the OBR estimates the cost of the State Pension will reach 7.7% of GDP.
Two main reasons are driving the cost of the State Pension, and the solution to them could present challenges when planning your retirement.
1. Shifting demographics could lead to the State Pension Age rising
The number of adults below the State Pension Age compared to those claiming the State Pension has fallen. In the early 1970s, there were around 3.4 adults of working age for every pensioner, which fell to 3.2 in the 2010s. Due to rising life expectancy, the OBR expects the ratio to fall even further to 2.7.
As a result, there’s speculation that the Labour government could increase the State Pension Age to reduce the cost. In August 2025, the Independent reported that the State Pension Age could rise as high as 80 over the long term unless major changes are made.
2. High inflation could lead to the triple lock being reviewed
The triple lock was introduced in 2010 and commits to the State Pension rising by the highest of three measures – the increase in average earnings, inflation as measured by the Consumer Prices Index, or 2.5% – each year.
This annual rise may be important for pensioners as it helps to preserve the spending power of their State Pension. However, the triple lock could be reviewed or even scrapped as the OBR report suggests high inflation and volatility have led to it costing around three times more than initial expectations.
It’s important to note that the Labour government hasn’t announced any changes to the State Pension yet. However, the speculation highlights why a robust retirement plan is essential.
By taking other steps to secure your retirement, you could continue to work towards your later-life goals and be confident about your long-term financial security, even if the State Pension Age or triple lock are reviewed.
Your financial planner could help you assess your options if you’re concerned about the potential changes.
You may find that you’re already in a position to mitigate the potential effects of State Pension changes, which could ease your mind. Alternatively, you might discover a possible gap in your finances. The good news is that by identifying the gap now, you could take changes to bridge it, such as increasing your pension contributions, delaying your retirement date, or reducing your expected retirement income.
Changes to the State Pension are likely to happen over the medium or long term. In the past, when the State Pension Age increased, it was over a period of several years.
So, the potential changes may not affect you, but they could significantly affect the long-term financial security of younger generations.
Speaking to your children and grandchildren about the importance of saving for their retirement could lead to them engaging with their long-term plan and potentially mean they’re more comfortable later in life.
You might also want to offer financial support to secure their retirement, such as making contributions to their pension now or leaving them an inheritance, which we could work with you to make part of your financial or estate plan.
Regular reviews with your financial planner could help ensure your long-term plans continue to reflect government changes, including those relating to the State Pension. If you have questions about your retirement or would like to update your plan, please contact us.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning.
When you make investment decisions, you know they should be based on data, logic, and careful analysis. Yet, the choices you make are often influenced by behavioural biases, and these psychological tendencies could even cloud how you view and manage existing investments.
Financial bias refers to the mental shortcuts or emotional tendencies that influence your decisions. In some circumstances, bias is positive and can help you make decisions quickly.
However, bias can also mean you overlook essential information or let emotions lead the way. When you’re investing, this could lead to you making decisions that aren’t right for you and may affect your long-term finances.
So, how do behavioural biases affect how you approach your existing investments? Here are five common types of bias you might recognise.
Status quo bias is a tendency to stick to what you know. It’s easy to see why this happens; it can feel comforting to keep things as they are, including your investments.
Taking a long-term approach to your investments is a good thing. Indeed, making knee-jerk investment decisions based on the news or your emotions can be harmful. Yet, status quo bias could also negatively affect your investment performance.
For example, you might keep money in an underperforming investment fund simply because you’ve done so for the last 10 years. It’s a mindset that could mean you miss out on opportunities.
If you value an investment more highly than the market price, you might be affected by the endowment effect. This is where owning something increases its value in your eyes.
Imagine if you purchased shares in a company five years ago. As you’ve watched the price of the shares rise and fall in response to market fluctuations, you’ve created a sense of connection to them. So, even if the company data suggests the long-term value of the shares has weakened, you might avoid selling them, because you believe they’ll rise despite the lack of evidence supporting this view.
The theory of loss aversion suggests people feel the pain of losses more strongly than the pleasure of equivalent gains.
When you’re investing, this can mean you're reluctant to sell assets at a loss, even if it makes sense as part of your strategy. As a result, you could hold on to assets when the money could be invested elsewhere in a way that aligns with your goals.
Loss aversion can also have the opposite effect. You might sell investments before you intended because they will deliver a gain that you’re eager to claim. While the value of your assets would still grow if you did this, you’d potentially miss out on long-term returns.
Anchoring is when you tie the value of an asset to a particular reference point, such as a past share price. It could mean you have a skewed view of the investment because you’re not considering the latest information.
For example, if you purchase shares for £100, you may continue to view this as their value even though market conditions and company performance have changed since then. Again, this bias could lead you to hold on to underperforming assets for longer.
When you’re seeking information about a company’s performance, do you seek data that supports your already established view? If you do, you’re not alone. Many people are affected by confirmation bias and will ignore evidence that contradicts their opinion.
This can make it difficult to assess your investments objectively, as you’re only paying attention to some of the information available.
If bias affects how you approach investments, whether existing holdings or new opportunities, working with a professional could help you view your finances more objectively. Removing bias and emotions could lead to better decisions and outcomes that reflect your goals. Please contact us to arrange a meeting.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
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. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Financial planning can add real value to your life, helping you achieve your goals and enjoy the lifestyle you want.
When you think about financial planning, you might initially focus on the financial element.
Perhaps you’re interested in how planning can help you reduce your tax bill, invest to get the most out of your savings, or make sure you’re on track for retirement?
While financial planning can certainly help in these areas, it actually goes far beyond that. It’s all about helping you live the life you want, feel more confident about the future, and reach your goals.
When clients first approach a financial professional, it’s often because they need support with a specific question or concern, such as:
While a planner can help you answer questions like those above, the process of financial planning is even more all-encompassing, designed to deliver greater value.
In this guide, you can find out why.
Download your copy here: “Revealed: The value of financial planning” to discover how financial planning could help you achieve your long-term aspirations.
If you have any questions or would like to discuss how we could work together to build a financial plan, please contact us.
Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
