Pension Savers Withdraw Funds Early Over Inheritance Tax Fears

Pension savers are withdrawing funds from retirement accounts earlier than planned to minimize future tax liabilities. Research from Royal London involving 85 financial advisers found that 51% of those surveyed have seen a rise in early withdrawals and lump-sum gifts.

These behavioral shifts precede a policy change effective April 6, 2027, which will include most unused pension funds and specific death benefits in estates for inheritance tax purposes. The data shows 64% of clients are inquiring about this tax treatment, while 62% of advisers believe the upcoming Autumn Budget on October 28 will negatively affect the long-term financial security of their clients.

Jamie Jenkins, head of policy at Royal London, noted that the changes are already influencing conversations and behavior. The organization is calling for greater certainty and simplicity in the tax system to enable individuals to plan their estates and retirements more confidently.