Following the 2024 Autumn Budget, 82% of independent financial advisers (IFAs) have re-evaluated the role of pensions in client planning, according to research from Standard Life.
With Inheritance Tax changes set to include pensions from 2027, advisers are adjusting their strategies.
Two thirds (69%) of IFAs have advised clients to increase their retirement income withdrawals.
Over 43% of them recommended an increase of 5% or more, while 74% have reconsidered the role of annuities, and 27% have suggested more annuity purchases.
Annuity premiums quoted has risen by 14% post-Budget, reflecting strong demand.
In addition, annuity sales has increased by 24% in 2024, with figures reaching £7bn.
This rise is supported by steady annuity rates, which rose 2.5% between January and September 2024, according to Standard Life’s annuity rate tracker.
However, some uncertainty remains, with 62% of IFAs expecting further changes to pension allowances or tax rules in upcoming fiscal announcements.
Claire Altman, managing director of individual retirement at Standard Life, 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, 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.
“Traditionally, advisers have used a benchmark of 4% when it comes to client pension withdrawals each year, and it is striking to see that they are now advising an additional 4% on average, with significant numbers recommending an additional 5%.”
Altman added: “In addition to increasing withdrawal rates for those in drawdown, advisers are also considering other means of taking an income and are turning to annuities in increasing numbers due to a combination of the certainty they provide and the attractive rates on offer.”
