A third (34%) of affluent retirees expect to pass on more money than they’d like when they die, according to a new study.
It also showed that two-fifths (42%) think their families would rather they enjoyed their wealth now, compared with 16% who believe their heirs want a bigger inheritance.
With most unused pensions due to fall into the inheritance tax net from April 2027, surplus legacies could leave families facing bigger-than-expected inheritance tax bills, warned adviser platform business Wealthtime, the firm behind the survey.
HMRC has estimated that up to 10,500 estates could become newly liable for inheritance tax in 2027/28 once pensions are included and a further 38,500 could pay more.
Speculation about further pension changes continues ahead of the Budget on 28 October, but bringing pensions into inheritance tax is already law.
With the new rules less than six months away, the research found that 48% of pension holders were unaware or had only vaguely heard of them, while 23% knew of them but were unsure of the detail.
Asked what they have done or are seriously considering in response to the upcoming changes, pension holders most often cited reviewing their will or estate plans (35%), taking financial advice (31%), taking more income from pensions (28%) and bringing forward gifts (26%).
But adviser responses suggest few clients are raising the new IHT rules unprompted. The top changes, each reported by fewer than a quarter of advisers, were more client questions about death benefits (24%) and clients delaying decisions while awaiting clarity (23%).
Sophie Hall, Wealthtime commercial director said: “Retirees who don’t feel they have permission to spend can end up leaving larger legacies than they wanted to, and from April next year that could land their families with a higher inheritance tax bill.
“With half of pension holders knowing little or nothing about the rule changes, it’s unlikely they’ll raise the subject themselves.”
She urged advisers to get families talking about legacy plans, rather than waiting for clients to ask, or for the next scheduled review.
• The research was conducted by Ad Lucem. The consumer research was among 1,000 UK retirees aged 55 and over who were fully, mainly or semi-retired, personally involved in household money decisions, held at least £100,000 in qualifying non-pension investable assets, had more than one type of retirement, investment or secondary-property holding, and had access to assets that could support retirement spending. Within the sample 60% were currently advised, 20% previously advised and 20% never advised. The adviser research was among 200 UK advisers and planners, each personally looking after at least 20 clients drawing retirement income, weighted to the profile of the UK advice market.