From April 2027, pensions are set to become subject to Inheritance Tax (IHT) for the first time. For many families, this could mean a larger tax bill on death, unless proactive planning is put in place.

Let’s explore what’s changing, what it could mean in practice, and the key ways you can still protect your wealth for future generations.

What’s Changing?

At the moment, pensions sit outside your estate for IHT purposes. That means when you pass away, your pension funds can usually be passed to your chosen beneficiaries free from Inheritance Tax, and often income-tax-free if death occurs before age 75.

However, from 6 April 2027, the government plans to include unused pension funds within your taxable estate, meaning they could now face the 40% IHT charge — just like your property, ISAs or other investments.

While final details are yet to be confirmed, this could make a significant difference to what your family ultimately inherits.

What Could the Difference Look Like?

Example 1: Current Rules (2025/26)
Sarah has a £1 million pension pot and passes away aged 80. She has already used her £325,000 nil-rate band elsewhere.
Under current rules, her pension is outside her estate — so no IHT is due.
Her beneficiaries receive the full £1 million (subject to income tax as they draw it).

Example 2: Post-2027 Rules
If Sarah dies after April 2027 and her pension is brought into her estate, the same £1 million could now face 40% IHT, resulting in a £400,000 tax bill.
Her beneficiaries could be left with just £600,000 — a huge difference for the same pot of money.

Why This Matters for Wealthy Clients

For some clients whose total wealth — across property, investments, and pensions — already exceeds as little as £325,000, this change could significantly increase their exposure to inheritance tax.

In short, pensions will no longer be the “tax-free wrapper” for intergenerational wealth they once were — and ignoring the issue could cost your beneficiaries dearly.

How to Reduce the IHT Impact

Thankfully, there are several smart, tax-efficient strategies that can help reduce or even eliminate the IHT bill.

1⃣ Business Relief (BR) Investments

Certain qualifying investments — such as holdings in trading businesses or AIM-listed shares — can qualify for Business Relief (BR), offering powerful inheritance tax advantages.

Under current rules:

• The first £1 million of qualifying business assets (per person) can attract 100% IHT relief after just two years.

• Any value above £1 million can still benefit, but would typically be subject to 20% IHT instead of the full 40% rate.

• AIM-listed shares will qualify for 20% rather than 40% inheritance tax

This makes Business Relief investments a flexible option for those wanting to retain access to capital while still reducing the taxable value of their estate.

However, business relief is a high-risk investment and isn’t right for everyone.

2⃣ Whole of Life Insurance – Creating Liquidity for the Tax Bill

Even with the best planning, many families will still face some level of IHT. That’s where Whole of Life insurance can come in.

This type of policy is designed to pay out on death, providing a lump sum to cover the IHT bill.
When written in trust, the proceeds fall outside your estate, so the money can be accessed quickly to pay HMRC — without selling property, investments or business assets.

It’s an effective way to create liquidity at exactly the time your family needs it most.

3⃣ Trust Planning

Trusts remain a cornerstone of good estate planning. You could consider moving surplus income or capital into trust, reducing the value of your taxable estate while maintaining control over how and when funds are distributed.

A spousal bypass trust can also help direct pension death benefits outside of your beneficiaries’ estates, keeping wealth flexible and protected for future generations.

4⃣ Gifting and the ‘7-Year Rule’

If you have more than you’ll realistically spend, lifetime gifting can be one of the simplest and most effective IHT-reduction strategies.

• Outright gifts are IHT-free after seven years

• You can use your £3,000 annual exemption each year

• Regular gifts from surplus income are immediately exempt, provided they don’t affect your standard of living

Even modest, regular gifting can make a meaningful difference over time.

5⃣ Charitable Giving

Leaving 10% or more of your estate to charity can reduce the IHT rate on the remaining estate from 40% to 36% — allowing you to support causes you care about while reducing your family’s tax bill.

6⃣ Review Your Pension Nominations

Even though pensions may soon fall within IHT, they remain a flexible estate-planning tool.

Make sure your expression of wish is up to date and reflects your current circumstances and intentions — especially if you’re considering new strategies like trusts or insurance.

Taking a Holistic Approach

Every client’s situation is unique. The right plan depends on your wealth, income needs, family structure, and long-term goals.

We take a holistic view, combining investment management, tax-efficient structuring, and protection planning to ensure your money supports both your lifestyle today and your legacy tomorrow.

Final Thoughts

The proposed changes to pensions and IHT represent a major shift in how wealth may be taxed in the UK.
But with early planning — through Business Relief, trusts, lifetime gifting, and Whole of Life cover — you can still stay one step ahead and ensure your wealth passes smoothly to those who matter most.

If you’d like to explore how these changes could affect your estate, or what planning options might work best for your family, please do get in touch.
I’d be happy to help you review your position and create a plan that gives you — and your loved ones — peace of mind.

FAQs

Will my pension be taxed when I die after 2027?
Yes. Under the proposed changes, unused pension funds are expected to be included in your estate for IHT purposes from April 2027.

How can I reduce inheritance tax on my pension?
Consider strategies such as Business Relief investments, trust planning, lifetime gifting, and Whole of Life insurance to cover any remaining tax liability.

What is Business Relief for Inheritance Tax?
Business Relief allows certain business or qualifying AIM investments to be passed on with up to 100% IHT relief on the first £1 million of value (20% IHT thereafter).

How does Whole of Life insurance help with IHT?
A Whole of Life policy, written in trust, pays out on death to provide cash to settle the IHT bill — ensuring your family doesn’t need to sell assets to pay the tax.

You can find more information about how to reduce your inheritance tax bill here

You can also read my previous blog, Investments & Inheritance Tax Planning: Keeping More in the Family, here

 Risk warnings 

·  The value of investments, and the income from them, can go down as well as up.

·  You may not get back the full amount you invest.

·  Past performance is not a reliable indicator of future results.

·  The tax treatment of investments depends on individual circumstances and may change in the future.

·  Pensions: Your eventual retirement income will depend on contributions, investment performance, and tax rules at the time

·  ISAs: Tax advantages depend on your personal circumstances and may change.

·  Property/Alternative Investments: The value of property and specialist investments can be harder to sell (illiquid) and may rise and fall in value more sharply.

·  Business Relief / EIS / VCTs: These are higher-risk investments and may not be suitable for all investors. They are often illiquid, and tax benefits depend on HMRC rules.

·  Investments should always be considered in line with your risk profile and personal circumstances.

·  You should seek professional advice before making any investment decision.

The post 💬 Big Pension Changes Ahead: What the 2027 Inheritance Tax Rules Could Mean for You appeared first on Alice Douglass.

Moving from growth to decumulation can present a number of challenges – one of which is how much income you should draw from your pension. Spend too much, and you run the risk of having a shortfall later in retirement. Spend too little, and you may prevent yourself from enjoying the retirement you’d hoped for.

With This is Money reporting that 48% of retirees worry about outliving their pension, it’s crucial to understand how you could use your wealth to provide an appropriate level of income throughout your retirement.

One strategy for extracting income from your pension is the “4% rule”

Devised by US financial planner William Bengen in 1994, the 4% rule was once thought to be a useful way to work out how much you could take from your pension each year.

In short, Bengen believed that making 4% withdrawals each year would provide a comfortable retirement while still allowing for growth.

This may sound like a simple and effective retirement strategy. But look closer and you might discover that while this rule may be a reasonable starting point, it won’t necessarily meet your unique needs.

So, read on to find out why relying on the 4% rule may be unwise, plus how bespoke financial planning could help you draw a sustainable retirement income.

4 compelling reasons the 4% rule may not be right for you

1. You may have other investments to draw on

Narrow in its scope, the 4% rule only considers how you could use your pension savings to generate your retirement income.

And yet, if you’ve enjoyed a successful career and diligently saved for your future, the chances are you’ll have assets and investments that you don’t hold in a pension.

For example, you may have a combination of dividends, ISA investments, or income from buy-to-let properties, all of which could be utilised to enhance the income you receive from pension payments. Plus, the State Pension may provide a reliable boost when you stop working.

If, on the other hand, you don’t have additional forms of income, your personal pension will need to stretch further.

A sensible way to manage your retirement and provide yourself with peace of mind that your savings will last a lifetime is to stick to a financial plan designed around your specific needs and circumstances.

2. The rigid rule doesn’t account for your fluctuating income needs

While it may not be easy to calculate how much money you’ll need throughout your retirement, it’s important to recognise that it’s unlikely to remain at the same fixed amount.

In fact, each stage of retirement will change how much you might need:

• On the go – During the early stages of retirement, there’s a strong chance you’ll spend more on travel, hobbies, or home improvements.
• Slowing down – While you may be slightly less active, you’re still busy with hobbies, but you may be less inclined to long-haul travel.
• Coming to a stop – In later life, your mobility may be more limited, and you could require care.

Understanding that your income needs are likely to change, cashflow modelling can be a helpful tool to illustrate whether your savings are sufficient to support you throughout your life.

Your financial planner can input data such as your current assets and savings, key event dates such as your expected retirement date, and any financial commitments you have now, or in the future. To forecast your future income, the software makes assumptions about the expected returns on investments, and how inflation might change things.

By regularly reviewing your cashflow model, you will understand how much income you are likely to need. Then, together with your planner, you can decide the best options for how to generate the appropriate amount, taking your pension and other assets into account.

3. Increasing life expectancies mean your pension may need to last longer

Bengen devised his 4% rule on the basis that retirees need to create a retirement income for 30 years. But with life expectancy increasing, there’s every chance that your retirement could last far longer.

Data from the Office for National Statistics reveals that:

• A man aged 55 has an average life expectancy of 84 years and a 4% chance of living to 100
• A woman aged 55 has an average life expectancy of 87, with a 7% chance of living to 100.

So, if you decided to access your pension at age 55, it may need to last you for more than 40 years.

As life expectancies continue to rise, so too does the chance that you’ll need to draw on your pension for longer. As such, applying the 4% rule could prove a risky strategy.

4. Investment volatility means returns cannot be guaranteed

Another problematic assumption the 4% rule makes is that your investment returns will continue to grow throughout your retirement.

Yet investment returns cannot be guaranteed, and the value of your pension fund will fluctuate.

Though periods of short-term volatility needn’t affect your long-term financial plan, they could have an impact on your withdrawals in the short term.

When markets fall, you may find you need to sell more invested units to achieve the same level of income. This could deplete your fund faster than expected, making budgeting and managing your withdrawals that much harder.

Get in touch

Whether you’re on the road to retirement or already there, I can help you understand all available options for generating a sustainable income and support your lifestyle goals.

Email me on a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. Alternatively, call my mobile on 07525 177 046.

While I offer high standards of service and will work with you to ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

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.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

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.

The post Should you apply the 4% rule to your pension income? appeared first on Alice Douglass.

Taking financial advice during a divorce could help you split your assets and start this new chapter with financial peace of mind, but sadly, most people don’t take advice during a separation. Money Marketing reports that just 7% of those who have gone through a divorce took financial advice, but 40% say they did not leave the marriage in an “equal financial situation”. 

Seeking advice could have several benefits for divorcing couples, including helping you to look at all your assets and come to an agreement that satisfies both parties. Property, cash, and investments are often the first shared holdings placed on the table – and while these are essential to discuss, there’s one asset that is often overlooked by divorcing couples: pensions.

Your pension may be one of the most valuable assets to your name. In fact, when combined with that of your spouse, your collective pension wealth could even be worth more than your home.

Read on to find out why it is so important to discuss pension sharing in a divorce, and how a financial planner could be of great help.

Leaving pensions out of divorce proceedings could affect your retirement security

It’s important to understand that leaving pension discussions out during a separation could throw your financial stability into question later in life, especially if you are a woman. 

Indeed, Legal & General found that while both parties normally leave a marriage with less money, women usually see a 33% decline in income after divorce, whereas men see around an 18% income decrease. 

Often, women may take the family home in a divorce, especially if children are involved, which means pensions may be offered to the man in order to balance the assets they split. 

Although women are typically at greater risk of sacrificing essential pension wealth in a divorce, anyone can be affected by an unequal division of pension wealth.

Worryingly, PensionsAge reports that between January 2016 and August 2022, fewer than 1 in 8 divorcing couples split their pensions. Yet there are a number of ways to do so that could suit both of you, so let’s take a look at a few common pension sharing options for divorcing couples.

3 popular pension sharing routes for divorcing couples

Here are three popular pension sharing options that separating couples often consider.

1. Splitting pensions equally through a Pension Sharing Order 

During a divorce, the court may issue a Pension Sharing Order (PSO) that requires both parties’ pensions to be split equally.

A PSO is usually expressed as a percentage of the transfer value one party is set to receive. For instance, if you have a larger pension than your spouse, part of your pension may be transferred over to leave both of you with equal pension wealth when the marriage ends.

This option offers couples a clean break, and helps to ensure that both parties maintain their retirement security for the years to come. 

2. Offsetting

This option involves offsetting the value of a pension against other possessions you have as a couple. 

For instance, if your pensions were worth a total of £400,000 and your property was worth the same, one person could take your home and the other could receive both parties’ pension funds.

As you read earlier, offsetting is designed to form an equal split at the time of divorce, but does not account for investment performance or market fluctuations that could affect each person’s finances later.

Crucially, it also means that the party who receives property in exchange for their pension may need to begin their retirement savings again from scratch. Otherwise, they may later be required to sell their home in order to fund their retirement.

3. Earmarking

Earmarking a pension in a divorce means that, rather than splitting the assets up now, part or all of one person’s pension is reserved for the other person’s retirement.

Although helpful down the line, this does mean that one party won’t receive as much capital at the time of divorce. They are also beholden to the other party’s retirement timeline, meaning that they must wait until their ex-spouse takes their benefits to receive the agreed-upon lump sum or income.

A financial planner could help you ensure your future is protected during a divorce

You might be wondering: “What role could a financial planner play if my marriage were to end?”

Firstly, an experienced financial planner can provide far more than wealth advice – although this could be crucial when you are separating from a partner or leaving a marriage.

As a financial planner, I can: 

• Review your (and your partner’s, if appropriate) wealth circumstances before you divorce
• Offer advice on how your financial plan might need to change if you return to having a single income, using cashflow modelling software to project your new circumstances
• Look at how a division of key assets like pensions and property might affect your financial stability both now and in the long run
• Help you to make data-driven financial choices in an emotional time
• Continue to act as a guide when you begin splitting your assets
• Offer ongoing financial planning support as you enter a new chapter of your life. 

To find out more about what you have read here, email me at a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. 

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only. 

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 post Divorce and pensions: how a financial planner could help you share your retirement savings appeared first on Alice Douglass.

One complex subject that could be of interest as you approach retirement, or if you’re already retired, is tax. As you transition from working life to retired life, you might seek more clarity on how you’ll pay tax once you stop working and start drawing from your various sources of retirement income.

Sadly, as the cost of living remains high, Sky News reports that 1 in 3 people could struggle to make ends meet in retirement. As such, making the most of what you’ve got, and reducing your tax bill where possible, is crucial.

So, here are three need-to-know pension tax rules to be aware of before you retire, and how we can help you stay tax-efficient when you enter this new chapter.

1. You may pay Income Tax when drawing from your personal pension pot

Your defined contribution (DC) pension, also known as your “personal pension pot”, may make up a large portion of your later-life income. 

The way you draw from this pension pot will likely have an effect on your tax bill. There are typically two methods of drawdown: taking the whole pot as a lump sum, or opting for flexi-access.

Whichever option you choose, you can take a 25% tax-free lump sum.

However, if you take the entire pot at once, the remaining 75% of your pension may be subject to your marginal rate of Income Tax, meaning you could pay up to 45% tax on a large portion of your fund.

What’s more, lump sum withdrawals can sometimes trigger an emergency tax code, leading to many pension holders paying higher tax than they should upon their first withdrawal. 

Indeed, FTAdviser reports that instances of overpaid tax in the second quarter of 2023 were almost double the number reported in the same time frame of the previous year. This has led to HMRC returning £56 million in overpaid tax to those who accessed their pensions in that quarter.

Fortunately, flexi-access can be a more tax-efficient method of taking your DC pension. The same rule applies – 25% of a withdrawal is tax-free, and the remaining 75% may attract Income Tax – but when taking smaller amounts over time, this could keep you in a lower tax bracket.

2. Your defined benefit pension may attract Income Tax too

If you have a defined benefit (DB) pension, also known as a “final salary” pension, this income will also be subject to Income Tax as if it were a regular salary.

So, if you expect to receive a sizeable DB pension income upon retirement, it’s important to factor in the tax bill you may pay on this sum. 

Similar to any other income, your Personal Allowance, which stands at £12,570 as of the 2025/26 tax year, applies to your pension earnings. You can earn up to this amount without paying Income Tax or National Insurance contributions (NICs). Any earnings above this threshold are subject to Income Tax at your marginal rate.

3. If you have multiple sources of income, these are combined to form your tax liability in retirement

Calculating how much tax you might pay in retirement can be tricky when you have multiple streams of income. The most important thing to remember here is that many of your income sources will be combined to form an overall Income Tax bill. 

This could include money from your:

• State Pension
• DC pension
• DB pension
• Part-time work
• Properties (such as rental homes).

What’s more, you could be relying on money from your investment portfolio to make up a portion of your retirement income – and this could incur a Capital Gains Tax (CGT) bill. 

While ISA profits aren’t subject to CGT or Income Tax, cashing in on other investments could mean you pay CGT on income from: 

• Non-ISA shares 
• Business holdings
• The sale of a property that isn’t your main home, unless the home is very large
• Other belongings you own worth more than £6,000, apart from your car.

So, in addition to being aware of your potential Income Tax bill, it’s also essential to understand that you could pay CGT in retirement too.

Working with a financial planner can help you take a tax-efficient income in retirement

Organising an income in retirement can be complex. 

If you’ve been used to having one or two forms of income in your working life, drawing from a selection of sources might feel overwhelming at times – especially when you’re trying to keep your tax bill low.

That’s where personalised financial planning can come in. If you’re approaching retirement, or already taking your pension, working with a professional can put your mind at ease and help position your finances favourably for the years to come.

If you’d like to learn more about pensions, tax, and any other retirement matters this Pension Awareness Week, email me at a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. Alternatively, call my mobile on 07525 177 046. 

While I offer high standards of service and will work with you to ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment 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.

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 results. 

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 post 3 need-to-know pension tax rules to be aware of before you retire appeared first on Alice Douglass.

Auto-enrolment requires employers to sign certain employees up to a pension scheme when they begin working. As of August 2023, those who fall into the bracket of auto-enrolment are:

• Workers who are over the age of 22 but under State Pension Age, which currently stands at 66, and is set to rise to 67 by 2028
• Employees earning between £10,000 and £50,270 a year. Earnings over £6,240 are automatically counted as pensionable pay.
• Those who are not already in a suitable workplace pension scheme.

Auto-enrolment has allowed many employees, who previously would have had to opt into their pension scheme manually, to begin paying pension contributions from day one. 

If you are on the road to retirement, paying attention to your pension contributions is essential. Your defined contribution (DC) pension is likely to make up a large portion of your retirement income, so it’s vital to maximise your payments while you can.

Importantly, the government is set to expand auto-enrolment rules in the coming years, meaning workers could boost their pensions even further before stopping work.

Read on to find out how these plans to enhance auto-enrolment could have a positive impact on your DC pension, and how a financial planner can help you make the most of it.

Auto-enrolment is set to be expanded, giving savers the chance to boost their pension

According to FTAdviser, the government is set to extend auto-enrolment to include even more employees in the scheme. 

The Pensions (Extension of Automatic Enrolment) (No.2) Bill is being debated on an ongoing basis in the House of Commons, and the date at which it may be passed is yet unclear.

Under the new rules, auto-enrolment would cover:

• Those aged between 18 and State Pension Age
• All earnings up to £50,270, rather than starting at £6,240 as they do now.

The FTAdviser report reveals that this move “has the potential to improve retirement outcomes by between 7% and 13% for up to 3 million people”.

While broadening auto-enrolment could serve young people most effectively, this expansion could be hugely beneficial for your DC pension at any stage of your working life. Seeing as all of your pay up to £50,270 would newly qualify for auto-enrolment, your increased contributions could help your pot grow over the years before you retire.

What’s more, these new rules could have particular advantages for women. Alice Guy, the head of pensions and savings at Interactive Investor (ii), says that “Expanding auto-enrolment may particularly benefit women, who are more likely than men to be working part-time on a low income and more likely to be living in poverty in retirement.” 

Indeed, the reduction of the minimum earnings from £6,240 to £0 could make a big difference to women who work part-time while raising a family or return to lower-paid work after time away. This new legislation, if it is brought in, could take us one step closer to narrowing the 35% gender pensions gap.

No matter who you are, though, these new auto-enrolment rules could provide even greater opportunities for you to make pension contributions throughout your working life.

Working with a financial planner can help you maximise pension opportunities before you retire

If you are on the runway to retirement, these final career years can be crucial in supplementing your later-life income – especially if auto-enrolment is expanded as planned.

What’s more, there have already been two key developments in pension legislation in 2023. These are:

• The removal of the Lifetime Allowance (LTA) tax charge. In the spring Budget, Chancellor Jeremy Hunt announced that the tax charge applied to those drawing from pensions that surpassed the LTA would be removed. The LTA previously stood at £1,073,100. The removal of this charge means that you can save a potentially unlimited amount in your pension without facing a higher tax bill than normal when you draw the funds.
• The increasing of the Annual Allowance. The Annual Allowance limits how much can usually be contributed to your DC pension while benefiting from tax relief. Standing at £40,000 in 2022/23, this has increased to £60,000 (or 100% of your earnings, whichever is lower) in 2023/24, giving savers even more opportunities to make tax-efficient contributions.

These changes could be instrumental in boosting your retirement savings – and with professional guidance, you may be able to work them into your financial plan straight away.

I can help you:

• Review all the pensions you hold, and assess their value as you approach retirement
• Look at your current personal pension contributions and assess whether they can be increased
• Plan a tax-efficient drawdown method for when you do retire
• Factor other forms of income into your retirement plan, such as investments, cash savings, an inheritance, and the State Pension.

If you are soon to retire, now is the time to begin making plans – especially with the potential expansion of auto-enrolment offering a possible increase in contributions.

Get in touch

To discuss what you’ve read here, or any other aspects of retirement planning, email me at a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. Alternatively, call my mobile on 07525 177 046. 

While I offer high standards of service and will work with you to ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

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 results. 

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 post The important pension perks that could arise from the expansion of auto-enrolment appeared first on Alice Douglass.

Typically, people tend to invest or take action with their finances towards the end of a tax year, meaning that February and March are extremely busy. This is largely driven by fears that certain benefits, such as the ISA allowance, will be lost if it’s not used by the end of the tax year, as it cannot be rolled over into the next one.

If you tend to invest at the end of a tax year, you may inadvertently be damaging your wealth. Investing in April or May could expose your money to greater growth potential and allow it to enjoy more tax benefits – both of which could help to boost your wealth.

So, if you’re wondering: “Should I invest at the start of a new tax year?”, read on to discover three clever reasons why you may need to consider it.

1. It could increase your investment’s growth potential

Investing earlier in the tax year means that your money is invested for longer, which in turn could expose it to greater growth potential. This may help to boost your money’s long-term wealth. 

To demonstrate this, you may want to consider an article by Investor’s Chronicle, which provides food for thought. It used data from the MSCI World Index, which tracks the performance of a basket of companies across 23 developed markets.

It reveals that if you had invested £20,000 at the beginning of the tax year for 10 years leading up to April 2021, your investment would have been worth £356,353. If, however, you had invested at the end of each tax year it would have been worth £329,316 – a drop of £27,037. 

Please note, the calculations are for illustrative purposes only, and don’t consider the effects of charges on any investment. It also assumes that £20,000 was put into the ISA every year, even though the ISA allowance was lower in some years.

Even so, it illustrates that investing earlier in the tax year could be something you want to consider as it may help boost your money’s growth potential. Always remember though, past performance does not guarantee future performance.

2. Investing in an ISA could mean more tax-free cash to spend

As you can see, investing early in the tax year could help increase your money’s potential growth. That said, you may also be able to enjoy a higher level of growth potential in a much more tax-efficient way.

Investing in a Stocks and Shares ISA in April or May means that any growth your money enjoys will not typically be liable to Capital Gains Tax (CGT). This might be particularly attractive when you consider that the CGT annual exempt amount is £3,000 (2025/26 tax year). Any amount you then take from your Stocks and Shares ISA as income will typically be tax-free. 

Investing early in a Stocks and Shares ISA early not only means that your money could enjoy greater tax-efficient growth potential, but it also ensures you retain the annual exempt amount. This could then be used to reduce exposure to CGT if you have other assets which could be liable to the tax. 

In 2025/26, you can contribute up to £20,000 into a Stocks and Shares ISA. If you would like to learn more about the benefits of investing in a Stocks and Shares ISA earlier in the tax year, please read my blog about them.

3. Contributing early could boost your retirement lifestyle

A defined contribution pension (DC) – otherwise known as a money purchase pension scheme – is an investment as it holds a range of assets including stocks and shares. With this in mind, the above Investors Chronicle example demonstrates how contributing into your pension scheme earlier in the tax year could help increase its value over time.

This could be further enhanced by the tax relief pensions typically receive. As a 20% basic-rate taxpayer, every £100 you place into your pension costs you just £80 in 2023/24. If you’re a higher-rate taxpayer it will cost just £60, and additional-rate taxpayers may pay £55.

This means that the more you contribute, and the longer you contribute for, the greater the tax relief you receive. In other words, the government effectively puts more money into your pension, which could help to boost its value over time. 

As a result, you may be able to enjoy a better standard of living or finish work earlier.

Please remember that the level of contributions that receives tax relief is typically limited to your Annual Allowance. This equates to £60,000 or the amount you earn, whichever is the lower (2025/26 tax year).

Get in touch

If you’re considering: “Should I invest at the start of a new tax year?” and would like to discuss why it may be the best policy for you, please email me. I can be contacted at a.douglass@grosvenorconsultancy.co.uk or by calling 01793 766 123. Alternatively, you can reach me on my mobile, which is 07525 177 046. 

Please note that while I offer high standards of service and ensure that any solution I recommend is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information 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.

Tax levels and reliefs could change and the availability of tax reliefs will depend on individual circumstances.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investment 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.

The post 3 clever reasons investing at the start of a new tax year could boost your wealth appeared first on Alice Douglass.

Furthermore, the study also found that the gap between men’s and women’s pensions often starts to widen at the age of 35 years. A key reason for this is the gender pay gap, which tends to widen around this age as many women decide to stay at home or take part-time roles, maybe to look after children or elderly parents.

If you would like to learn about five important times in life you may need to review your pension, please read my informative blog.

As the amount of money that is contributed towards a workplace pension is based on income, taking a lesser-paid role can significantly affect how quickly a pension pot grows. There is good news though if you’ve stopped working or taken a part-time role, as a financial planner could help boost your pension pot so that you can enjoy the retirement lifestyle you want.

As March is the month of International Women’s Day, you may be wondering: “how can I enjoy the retirement lifestyle I want?”. If so, read on to discover five positive actions you could take and how a financial planner could help.

1. Boost contributions into a private pension

Pension contributions typically receive tax relief, which means that in 2025/26 every £100 placed into a retirement fund only costs you £80 if you’re a basic-rate taxpayer. If you’re a 40% higher-rate taxpayer, you will typically only pay £60 and if you’re an additional-rate taxpayer you could pay just £55.

As pensions normally benefit from compound growth, which is growth on the growth already made, this, together with the uplift from the tax relief, means that you may be able to significantly bolster your pension pot in a relatively short amount of time.

While in 2025/26 you can contribute any amount to your pension, the amount that receives tax relief is typically limited to the Annual Allowance. This is £60,000 a year or the amount you earn, whichever is the lower. If you exceed these amounts, you may receive a tax charge.

2. Pay more into your workplace pension

If you’re enrolled in a workplace pension, then you not only receive tax relief, but your employer also boosts your pot by a minimum of 3% of your qualifying earnings. As some employers may be prepared to pay more than this into your pension as part of your benefits package, you may want to speak with them to confirm whether this is the case.

Paying as much as possible into your workplace pension may mean you get an even greater uplift from your employer, which, together with your tax relief, could provide your retirement fund with a major boost. As a result, you might be able to enjoy a better standard of living when you retire.

3. Consider paying a lump sum into your retirement fund

In 2025/26, if you earn more than £60,000, you may be able to receive tax relief on contributions that you make that are above this amount. This is done using “carry forward”, which allows you to make higher pension contributions and still receive tax relief on them.

This is because carry forward uses unused amounts of Annual Allowance from the previous three years, potentially allowing you to contribute up to £180,000 and receive tax relief (2025/26).

As strict rules apply to carry forward, care must be taken before you contribute to your pension, as getting it wrong might result in you facing a significant tax charge. A financial planner will be able to confirm whether it’s right for you or not.

4. Adjust the level of risk your pension’s exposed to

A pension is an investment, so typically includes assets such as stocks and shares, bonds, and cash. As growth is usually provided by higher-risk assets like stocks and shares, not having enough exposure to them could lower your pension’s growth potential.

As a result of this, your pension pot may not grow to the levels needed to provide the lifestyle you want. Increasing the level of risk it’s exposed to may help to boost its future value, although care must be taken as it will also expose your pension to a greater risk of losses.

This is something a financial planner can help you understand, as well as the level of risk your pension is currently exposed to and the options that may be available to you.

5. Locate lost pensions and consider consolidating them

According to an article by Unbiased in February 2023, UK workers have lost track of up to 1.6 million pension pots worth £19.4 billion. If this includes pensions that belong to you, finding them might be a good way to give your retirement fund a significant boost.

A financial planner could help with this and provide options you may want to consider should you locate a lost pension. This could include consolidating them, as this may help improve their growth potential, reduce their fees, or both.

To learn more about consolidating your pensions, please feel free to read my blog on it.

Please remember that merging pensions can carry risk, so never do so without speaking to a financial planner first. Furthermore, ensure that the financial planner is bona fide so that you don’t fall foul of a potential scam.

Get in touch

As you can see, if you’re wondering: “how can I enjoy the retirement lifestyle I want?”, working with a financial planner could be a shrewd strategy. As an independent financial adviser, I would be happy to help you understand how you could enjoy your dream retirement no matter what happens in your life between now and then.

If you would like to discuss how I may be able to help, please email me at a.douglass@grosvenorconsultancy.co.uk or telephone 01793 766 123. Alternatively, call my mobile on 07525 177 046.

Please note that while I offer high standards of service and ensure that any solution I recommend is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information 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.

Tax levels and reliefs could change and the availability of tax reliefs will depend on individual circumstances.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investment 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.

The post 5 powerful ways women can get their pension pot on a par with men’s appeared first on Alice Douglass.

It might be that the start of the year is when you normally assess your financial strategy, but there are other times when reviewing your investments and pensions might be a shrewd idea. Doing so at these times could help boost growth potential, ensure you’re as tax-efficient as possible, or help you avoid a financial decision you later regret. 

So, if you’re wondering: “should I carry out a review of my investments and pension?”, read on to discover five times you probably want to consider it, and how a financial planner could help.

1. You’re dealing with a life change

Whether planned or not, significant life changes can have an effect on your wealth, which includes your investments and pensions. These events could include:

• Having children
• Getting married
• Getting divorced
• A major promotion at work or a new job.

Having children, for example, may mean you stop working full-time to bring them up. As a result, you may not continue to make pension contributions at the same level as you have been previously.

This could reduce the value of your pension pot when you eventually retire and may reduce your standard of living when you stop working. Speaking to a financial planner could help you understand your options so that you can keep your pension on track, allowing you to enjoy the retirement lifestyle you want no matter what the future holds. 

2. You’re paying more Income Tax

According to the Telegraph, millions of workers may be liable to the 40% higher rate of Income Tax after the chancellor froze the threshold at £50,270 until 2028. As salaries are likely to increase because of the rising cost of living while the tax threshold remains static, it’s expected that many workers will be pushed up into the higher-rate tax band.

If you’re one of them, a financial planner might be able to help reduce your liability back down to the 20% basic rate of Income Tax. If you’re a high earner, a planner may also be able to reduce your liability from the 45% additional rate of tax back down to the 40% higher rate. 

One way a planner may be able to achieve this is through “salary sacrifice”. This is where your employer agrees to reduce your salary in exchange for them making higher contributions to your workplace pension. 

While this could provide tax benefits, salary sacrifice also carries risks. For example, it could reduce your ability to secure a mortgage or reduce any death-in-service benefits you may have. This is why it is important to speak to a financial adviser who will be able to confirm whether it’s right for you. 

3. You’re approaching retirement

A study by retirement specialists Just Group reveals that 53% of pensioners who accessed a defined contribution (DC) pension – otherwise known as a “money purchase scheme” – for the first time in 2021/22 did so without financial advice.

Doing this could result in you paying too much Income Tax on your retirement earnings, or even worse, could mean that you exhaust your pension pot earlier than expected. Working with a financial planner as you approach retirement can help you understand the level of income you can draw from your pension pot without inadvertently depleting it.

This could ensure that you can enjoy the lifestyle you want in retirement, safe in the knowledge that you are financially secure. Furthermore, a planner could help ensure that you take your income in the most tax-efficient way possible.

If your pension pot will not support the lifestyle you want, a financial planner could also provide options to help get it on track to achieve your retirement goals.

4. You fear that your investment fees are high

If you’re worried that the fees associated with your pension pot or investments may be excessive, a financial planner could help. They can explain how much you’re paying, the level of growth your money is enjoying after fees have been taken, and whether this is affecting your pension or investment’s ability to meet your financial goals.

A planner can also confirm whether switching to another pension or investment provider could help boost your money’s growth potential. As a result, you may be able to achieve your aspirations earlier than expected.

5. You’re interested in “sustainable” funds

The effects of climate change are becoming increasingly apparent. According to the Guardian, provisional figures by the Met Office reveal that 2022 was the UK’s warmest year ever. With this in mind, you might be looking to switch to Environmental, Sustainable, and Governance (ESG) funds, which aim to reduce businesses’ impact on the planet.

If this is something you are considering, a financial planner can review your investments, pensions, and wider financial strategy to confirm whether switching to ESG funds is right for you. Furthermore, they can help you avoid “greenwashed” investments, which is where companies held within ESG funds have made unsubstantiated or misleading claims about their sustainable credentials.

Reviewing your financial strategy with an adviser provides peace of mind that you could achieve your financial and lifestyle goals while you’re doing your bit for the planet.

Get in touch

If you’re wondering: “should I review my investments, pensions, or financial strategy?”, I would be happy to discuss it with you. Please email me at a.douglass@grosvenorconsultancy.co.uk or telephone 01793 766 123, and I’ll be happy to help. Alternatively, call my mobile on 07525 177 046. 

Please note that while I offer high standards of service and ensure any solution I recommend is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information 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.

Tax levels and reliefs could change and the availability of tax reliefs will depend on individual circumstances.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investment 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.

The post 5 really important times to review your pension and investments appeared first on Alice Douglass.

This is an increase of 19% when compared to the last time advisers were asked the question in 2018. While withdrawing more money from your retirement fund might be understandable given the soaring cost of living, doing so could jeopardise your long-term financial security.

If you’re wondering: “could my retirement lifestyle deplete my pension pot?”, read on to discover two reasons why it could and how a financial planner could help.

1. Maintaining your lifestyle might mean your pension pot runs dry

Before the Pension Freedoms legislation of 2015, people typically purchased an annuity when they reached retirement age. This is because it provided a guaranteed income for the rest of their life.

When the legislation came into force this changed, as it provided alternative ways for pensioners to access their retirement fund. While this has advantages, such as being able to take more from your retirement fund to counter the rising cost of living, it also incurs the very real risk that you might deplete your pension too quickly.

According to a report by Unbiased, research by Age UK highlighted concerns that pensioners could be drawing too much from their fund. The study estimated that 90,000 retirees were taking an annual income of 8% or more from their funds, which could jeopardise their lifestyle over the long term.

This is because withdrawals at this level would only be sustainable through periods of strong growth. If your pension were to grow at a more realistic 4%, it goes on to say, your pension pot might only last 17 years.

Taking more money to maintain your lifestyle when the stock market is volatile, as it has been in 2025, could result in your retirement fund running out even more quickly. You could be taking a larger percentage of your pension pot with each withdrawal, which then increases the chances of your pension being depleted.

This is likely to result in a significant drop in your standard of living. That’s why speaking to a financial planner is likely to be a very wise move, as they could confirm how much income you can take without jeopardising your pension.

2. You could pay too much Income Tax

When you access your pension pot, it’s important to consider the most tax-efficient way of doing it. Typically, when you do access it, you can take up to 25% of your fund as a tax-free lump sum, meaning the remaining 75% will be subject to Income Tax at your marginal rate.

The amount of Income Tax you pay is calculated by adding any withdrawal you make from your pension pot that’s over the tax-free lump sum to other taxable income. This means that if you do not manage your withdrawals carefully you could push your overall earnings into a higher Income Tax bracket.

If this happens you could face a 40% or 45% Income Tax liability. Furthermore, you could also trigger the HM Revenue & Customs (HMRC) emergency “month one” tax code, which could result in an unexpected, and substantial, tax charge.

This could happen if, for example, you decide to take an unusually high amount to kick-start your retirement. As a result, HMRC could assume that this is the amount you will take every month, which could result in a higher Income Tax charge.

If this happens you would then need to claim a rebate, meaning you could have to wait until the end of the tax year before you receive your money.

A financial planner will be able to advise you on the most tax-efficient way to withdraw money from your pension, such as taking smaller, regular withdrawals spread over many years. This means you will pay less Income Tax, which, in turn, means you will lose less of your retirement fund to HMRC.

A financial planner could also help you help the environment

Another advantage of using a financial planner when accessing your retirement fund is that they might be able to help you do your bit for the planet. Placing your existing pension pot into sustainable investments might enable you to live the lifestyle you want while also helping the environment.

If this is something you hadn’t considered, an article in PensionsAge might make for interesting reading. It reveals that one study found that switching to sustainable investments, which are today known as “Environmental, Sustainable and Ethical” (ESG) funds, could be 40 times more powerful in tackling climate change than switching to a renewable energy provider.

That said, you should never switch your pension to an ESG fund, or any other provider or type of pension, without speaking to a financial planner first. They will be able to confirm whether the pension you are considering is right for you, as well as the risks and possible costs that may be involved.

Get in touch

If you’d like help understanding how inflation is affecting your expenditure and how you could help protect your pension pot against its effects, I would be happy to discuss it with you. Simply email me at a.douglass@grosvenorconsultancy.co.uk or telephone 01793 766 123, and I’ll be happy to help. Alternatively, call my mobile on 07525 177 046.

Please note that while I offer high standards of service and ensure any solution I recommend is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information 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 value of your investment 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. Your pension income could also be affected by the interest rates at the time you take your benefits. Levels, bases of, and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The post 2 important ways your retirement lifestyle could deplete your pension appeared first on Alice Douglass.

Should I consolidate my pensions? It’s a question you may be asking yourself, especially as recent research by Scottish Widows suggests that merging your pensions could reduce their costs.

This is because some pensions could be more expensive than others, and having many different schemes might also mean you’re paying several sets of charges unnecessarily. Merging to one scheme might reduce costs and, as a result, could expose your retirement fund to greater potential growth.

That said, care should always be taken as you may already be in a fund with competitive charges, and a cheaper pension scheme may not always be appropriate.

Aside from costs there are other reasons having several old pensions may not work in your favour. For example, consolidating might make it easier for you to manage your pension and track performance.

One reason many people don’t consolidate their pensions though, is that they have lost them. According to Scottish Widows, more than 3.6 million Brits don’t know how many pensions they have or how to locate them.

This dovetails into a report by the Guardian, which reveals the total value of Britain’s lost pensions is estimated to be £19.4 billion. Small wonder Scottish Widows also found that 72% of those questioned are in favour of a system that would automatically consolidate pension pots when you move jobs.

Until this happens though, speaking to a financial planner to merge your old pensions might be a good move.  Read on to discover why.

1. You could reduce your pension costs by consolidating

Older money purchase pension schemes could come with higher charges, which may reduce the value of any growth and significantly reduce the size of your pension pot when you decide to retire. As such, they’re likely to provide a lower income in retirement and could put the lifestyle you planned at risk.

Transferring to a less expensive pension fund could reduce fees and help provide greater growth potential. This could result in your pension providing more income in retirement, or you might reach the level of income you need more quickly.

That said, don’t assume that consolidating your pensions automatically reduces costs. You could already be in a pension with less expensive fees, or maybe a cheaper alternative is not appropriate for your circumstances.

This is why it’s important to speak to a financial planner. They will clarify the costs associated with your pensions and any possible alternative, and provide reasons why you may, or may not, want to consider a cheaper alternative.

They will also help ensure the proposed pension is right for you, and check the level of potential growth your existing pensions offers will not reduced by moving it.

2. Consolidating your pensions could make them easier to manage

As keeping track of several pensions can be time-consuming and complex, consolidation could make it easier, as you’ll have less funds to monitor. This could make it easier for you to track performance and the fees your pension providers are taking.

Working regularly with a financial planner in the future also means you can monitor whether your retirement plan is on track. If not, the planner can provide alternative options to get your retirement fund back on course.

3. Consolidation could ensure the right level of risk

When you initially took out your pensions in years gone by, one of two things may have happened.

Either your contributions were put into a default fund by the pension provider, or you chose an exposure to risk you were happy with at the time.

In the years that have passed, the amount of risk that is suitable for you may have changed, although the risk profile of your pensions typically won’t have. As such, you could be in a high-risk fund that exposes you to too much potential for loss, or a low-risk fund that does not expose you to enough growth potential.

Part of the consolidation process with a financial planner is to determine the right level of risk for you. This provides peace of mind that your pensions will be in a fund that’s appropriate for your aims and circumstances.

Please remember, exposing your pension to more risk should not be done lightly, as you may get back less than you initially invested.

A financial planner can help you find your pensions

If you are wondering “should I consolidate my pensions?” always speak with a financial planner before going ahead. Switching and consolidating pensions can be time-consuming and complex, and may result in a decision you later regret if you do not take advice.

One reason for this could be that your existing pension has certain guarantees, such as a tax-free lump sum greater than the typical 25% or a guaranteed annuity rate. You may not want to lose these perks.

This is why planners will always provide a clear explanation of the type of pension you have, where it’s invested, the fees and the levels of growth it’s enjoyed, and whether consolidating it is right for you.

Should I consolidate my pensions? Get in touch

If you would like to discuss your retirement plans and pension, please email me on a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. Alternatively, call my mobile on 07525 177 046.

While I offer high standards of service and will work with you to ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information 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. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

The post Should I consolidate my pensions? 3 important factors to consider appeared first on Alice Douglass.