Why clients are accelerating pension withdrawals ahead of 2027

Introduction

You'll likely already know that from April 2027, pensions will no longer sit comfortably outside the inheritance tax net.

Despite HM Revenue and Customs' full guidance not expected until Spring 2027, research from Wesleyan indicates that 90% of advisers have seen clients accelerate their pension withdrawals.

Fears of a hefty tax bill are likely to blame for rash decision making. And with a lack of clear guidance, many are relying on social media influencer advice, artificial intelligence searches and half-understood headlines about pension tax grabs.

The risks of rash decisions

Making fundamental changes to retirement strategies designed to last decades carries clear risks. For example, volatility drag eroding returns over time and sequencing risk reducing sustainable withdrawal rates if markets turn early.

Clients are acting based on headlines, without fully understanding other factors that can leave them with less in the long term.

Why smart moves matter

As an adviser, you have the expertise to guide your clients through uncertainty and advise against irreversible decisions that could prove costly down the line.

It's important that before pensions are even touched, alternatives should be explored.

Trust structures, appropriate gifting strategies and strategic spending options are all ways to reduce estate exposure while keeping retirement income intact.

It's worth relaying to clients that the goal is preserving their pension's long-term role. Once withdrawn, that capital and its growth potential are gone.

This approach maintains flexibility, making sure when final guidance arrives next year, your clients aren't locked into decisions made before they had all the facts.

A deep dive into IHT and pensions

Over the coming months/weeks, we'll be exploring pensions and IHT in detail.

You'll discover:

• The hidden risks of accelerated pension drawdown
• Alternative strategies to consider
• Ways you can demonstrate value during periods of uncertainty
• What you should do now while waiting for HMRC guidance