by Laura Daly
6 October 2026
For many years, pension funds have been one of the most tax-efficient ways of passing wealth to future generations. However, significant changes are due to take effect from 6 April 2027, meaning it may be prudent to review your Will and wider estate planning arrangements sooner rather than later.
Under the current rules, pension funds are nominated to a beneficiary such as a surviving spouse or children and these unused pension funds fall outside a person’s estate for Inheritance Tax (IHT) purposes. From 6 April 2027, most unused pension funds and pension death benefits will instead be included when calculating the value of an estate for IHT.
As a result, individuals who previously believed their estate would fall below the IHT threshold may find that the inclusion of pension assets increases the value of their estate significantly. In some cases, this could result in a larger inheritance tax liability and less wealth passing to intended beneficiaries.
A review of your Will and Estate Planning advice provides an opportunity to consider whether your existing arrangements remain appropriate in light of these changes. For example, you may wish to revisit the beneficiaries of your estate, consider the use of trusts, or review how different assets are distributed on death.
It is also important to remember that pensions do not always pass in accordance with the terms of a Will. Pension death benefits are often distributed in line with the scheme member’s expression of wishes or nomination forms. Reviewing your Will alongside your pension nominations can help ensure that your overall estate planning objectives remain aligned.
The upcoming changes may be especially relevant for individuals with large pension pots, business owners, widows or widowers who have inherited assets from a spouse, and those whose estates are already close to the available IHT allowances.
Estate planning is not just about reducing tax. A carefully considered Will can ensure that the right people inherit at the right time, protect vulnerable beneficiaries, and minimise the risk of family disputes. The introduction of the new pension rules makes this an ideal time to review existing arrangements and obtain professional advice.
If you have not reviewed your Will for several years, or if your pension forms a significant part of your wealth, we recommend seeking advice before April 2027. A review now can provide peace of mind that your estate planning remains effective and that your wishes will be carried out in the most appropriate way for you and your family.
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