Standard Life has warned there was a surge in savers withdrawing more than the recommended maximum of 4% a year from their total pension fund.
State pensioners are ignoring a four per cent rule to avoid inheritance tax from the Labour Party government and HMRC. Standard Life has warned there was a surge in savers withdrawing more than the recommended maximum of 4% a year from their total pension fund.
It comes in a bid to escape Labour Party Chancellor Rachel Reeves’ plans to remove the IHT protection on retirement savings. Standard Life found that instead of the recommended 4% withdrawal, some savers were taking another 4% to 5% on top.
Four in five IFAs are reevaluating how pensions are used as retirement income, research by Standard Life reveals, after the Autumn Budget announcement that pensions would be brought into the scope for inheritance tax.
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One in ten advisers said they are undertaking a full review of the role of pensions in clients’ plans. 69 per cent said they recommended taking increased income from pensions, with 43 per cent of these telling their clients to increase their retirement income by 5 per cent.
Claire Altman, managing director of individual retirement at Standard Life, part of Phoenix Group, said: “The planned extension of inheritance tax to cover pension assets from 2027 has clearly had a profound effect on how IFAs are advising their clients.
“The fact that such a large number are having conversations with their clients about increasing the level of income they take in retirement gives a clear signal as to how advisers are responding to these changes.
“The planned extension of inheritance tax to cover pension assets from 2027 has clearly had a profound effect on how IFAs are advising their clients, and the fact that such a large number are having conversations with their clients about increasing the level of income they take in retirement gives a clear signal as to how advisers are responding to these changes.”
Inheritance tax is charged at 40 per cent over the nil-rate band of £325,000. Many also have access to a £175,000 residence nil rate band and ability to transfer allowances to their spouse when they die.
