Potential pensions inheritance tax repeal?

A full repeal looks unlikely, although there may be some softening at the margins depending on the fiscal backdrop the government is faced with. Most advisers I speak to are therefore working on the assumption that the legislation will remain in place, because building plans around political uncertainty risks poor client outcomes. That said, the lack of long‑term consistency in pensions policy is clearly shaping behaviour as we saw around the time of recent budgets. We’re seeing greater use of flexible, diversified strategies and earlier engagement with inheritance tax planning. Ultimately, the priority is to preserve optionality for clients rather than rely on any one set of rules enduring.

From a political perspective, this is ultimately a revenue decision. If the policy raises meaningful sums, it becomes significantly harder for any incoming government to unwind without finding that money elsewhere.

When we reach the next election, this will have been in place for more than two years, which makes a repeal less likely, and I would be cautious about treating a reversal as a base for advice, because a lot could change in that time.

Advisers who assume this policy will be overturned take a huge risk. The more pragmatic approach is to acknowledge that this needs to be a core feature of pension planning and to build flexibility into a strategy for clients in the future.

Those in their later years should rightfully feel angry by this, and for some, it is too late to try to reverse the impact this will have on their finances when passed down. What this highlights is a wider issue that the lack of long-term consistency in pensions policy is beginning to influence behaviour.

Trying to guess what future governments are going to do is clearly more difficult that prediting what future government we may have and that's hard enough. The pension IHT reforms are clearly unfair, but double taxation possible for wealthy over 75s. The abitory over 75 drawdown tax rules were bizarre anyway, and the sweeping IHT regulations now added in make them even more unjust. However, its easy to pick on a pension who has a million pound in the bank.

Saving for retirement is an act of faith: decades of discipline, deferred gratification, and trust that the rules will hold. Will this legislation be amended? Possibly. But that uncertainty is itself part of the problem.

When governments repeatedly break the compact, abolishing major allowances one year, rewriting inheritance tax the next, they do not just change the rules. They attack the incentive to play at all.

The evidence is damning. 14.6 million people are already undersaving, and the government's own forecasts warn that tomorrow's retirees will be poorer than today's.

The dilemma sharpens. Draw on your pension too slowly and more wealth may fall into the inheritance tax net. Spend too quickly, and you risk relying more heavily on the state in your final years.

Pensions policy should be sacrosanct. Until it is, no amount of advice can substitute for the one thing long term saving truly requires: certainty.