Plans to make the unused pension pots of people who die before the minimum pension age subject to inheritance tax, have been termed ‘unfair’ by SSAS provider the WBR Group.

The move will hit families with IHT bills on unspent retirement pots.

HMRC has confirmed that the unused pension of anyone dying before the minimum pension age will be liable under the new IHT rules.

The minimum pension age is currently 55 but is rising to 57 in 2028.

Caitlin Southall director of SSAS transformation and proposition at WBR Group, said: “Including ‘unused’ pension funds in scope for IHT is unbelievably unfair. If people cannot ‘use’ these funds under current rules, why should they be subject to IHT?

“The Government is creating significant barriers for people to save responsibly for their retirement. By all means encourage people to use pensions for later life saving, and not as a wealth transfer tool, but this is not the way to do it.”

From April 2027 inherited pension pots will be subject to IHT, Chancellor Rachel Reeves confirmed in her Autumn Budget.

The Treasury said the decision, “removes a distortion which has led to pensions being used as a tax planning vehicle to transfer wealth rather than their original purpose to fund retirement.”

There’s overwhelming opposition to the proposed introduction of IHT on unused pensions, according to a survey conducted by WBR Group in March.

Financial advisers are turning away from pension wrappers and instead utilising pension gifting, annuities and onshore bonds as they prepare for the upcoming changes to inheritance tax, according to a report published in May.