Millions of pensioners across the UK are expected to receive a state pension rise of 4.7% next April, a figure that exceeds inflation and could place further strain on public finances just as Chancellor Rachel Reeves considers potential tax increases in the upcoming Autumn Budget. 

Labour has pledged to maintain the state pension triple lock, which ensures payments rise each year by whichever is highest out of 2.5%, inflation in September, or average earnings growth over the three months to July.

New data released this week shows that average weekly earnings, including bonuses, were 4.7% higher between May and July compared to the same period last year. With September’s inflation figure currently sitting at 3.8%, experts believe the earnings growth measure will set next year’s state pension increase.

The Government will confirm the final uplift ahead of the Budget, but Work and Pensions Secretary Pat McFadden reiterated Labour’s commitment to the triple lock on Tuesday.

“That’s a commitment from the Labour government to the UK’s pensioners,” he said. “It’s something that we said we’d do at the election and something that we will keep to.”

The confirmation that the triple lock will be upheld has come as a relief to many as there had been rumours that it might be abandoned as another part of Labour’s tax campaign.

The ‘Triple Lock’ explained

The ‘triple lock’ refers to a well-known state pensions policy that ensures state pensions rise every year by either the average earnings growth, inflation (as measured by the Consumer Prices Index) or a flat 2.5% - whichever is highest that year, hence the name ‘triple’ lock.

It was designed in principle to make sure that state pension value would always have the best growth outcome each year for pensioners. The guarantee that the highest of the three will be what pensions grow against ensures that savers have three layers of protection against inflation, hence the name ‘triple lock’. This is incredibly important in maintaining a level of healthy financial security for those relying on their pensions, as it guarantees growth irrespective of how volatile the economy becomes.

If you want to find out more about retirement planning, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to find out how we might be able to help you.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. 

The terms advice and guidance are often used interchangeably when it comes to financial matters, but in reality, they are very different. And in today’s fast-changing financial landscape, understanding this difference is essential.

Since the introduction of the Pension Freedoms in 2015, individuals have had greater control over how and when they access their defined contribution (DC) pension pots. In response, the government established services to offer free, impartial guidance aiming to help people aged 50+ understand their options and avoid costly mistakes.

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One such service is the MoneyHelper platform, provided by the Money and Pensions Service (MaPS), previously known as Pension Wise. The idea was (and still is) to ensure people receive basic, unbiased information before making decisions about their retirement income.

As UK Pensions Minister Guy Opperman put it, “We will introduce new provisions requiring trustees of occupational pension schemes to nudge members to appropriate guidance when they seek to access their pension through the pension freedoms.”

This “nudge” while helpful, begs the question: is general guidance really enough when you're making decisions about what could be hundreds of thousands of pounds of lifetime savings?

What’s the difference between guidance and advice?

Guidance

Guidance is all about information rather than recommendations that are specifically tailored to your situation. It helps you better understand the options available, but the responsibility to decide and act lies entirely with you.

Government services like MoneyHelper for example, or your pension provider’s website may offer generalised content, online tools, or telephone support to guide you through the basics of pensions, investments, or budgeting.

In fact, anyone, including friends or colleagues, can technically give “guidance”. But remember, they aren’t liable for the outcome, and you're not protected if things go wrong.

What you won’t get from guidance:

• Personalised recommendations
• Product suggestions
• A risk assessment of your circumstances
• A regulated professional who is accountable for their advice

Advice

Advice, by contrast, is personal, specific, and regulated. When you take financial advice, you're working with a qualified and authorised Financial Adviser who assesses your entire financial situation, whether that be your goals, risk tolerance or future plans, then recommends a course of action tailored to you.

You’re also protected. Advisers are regulated by the Financial Conduct Authority (FCA) and must adhere to strict standards. If something goes wrong, you may have access to the Financial Ombudsman Service and Financial Services Compensation Scheme.

What about the cost? And is it worth it?

Guidance is usually free and is offered by government-backed services or your pension/investment provider, for example. It’s a good starting point, especially if you just want to understand your options or educate yourself.

Advice, however, is a paid professional service, and like any other expert service, the cost reflects the time and complexity involved.

There are two main types of advisers:

• Independent Financial Advisers (IFAs), who offer whole-of-market advice across a full range of products and providers. All our advisers at The Private Office are Independent Financial Advisers.
• Restricted Advisers, who are limited in the scope of advice they can give, often tied to a particular provider or product range.

Choosing the right type of adviser can significantly impact your financial outcomes. Independent advice means you're more likely to get the best solution for you rather than for the adviser’s institution. 

The rise and possible risks of AI in financial guidance

A key change in the advice landscape is the increasing use of Artificial Intelligence (AI), particularly Large Language Models (LLMs) like ChatGPT and other advanced systems. 

Using LLMs as a substitute for regulated financial advice carries several risks. To be balanced, however, on one hand, there are benefits, including speed, ease of access and lower (or no) cost. But the pitfalls are real and therefore need to be carefully considered.

Here are some of the potential risks:

1. Inaccuracy & outdated / partial information
   LLMs may rely on data that is not fully up to date, or doesn’t reflect recent regulatory, tax or product changes. They also generate plausible‑sounding but false or misleading information, known as hallucinations, from time to time.
2. Lack of holistic view
   AI tools typically only see what you tell them. They can’t pick up life‑events you haven’t mentioned, emotional preferences, long‑term goals, or unexpected future needs. A human adviser can ask probing follow‑up questions to uncover things you may not have thought to tell them.
3. No regulatory protection
   Advice from AI tools is not regulated in the way financial advice from an FCA‑authorised adviser is. If things go wrong, there is no ombudsman to make claims, no compensation scheme, and no requirement that those giving the advice act in your “best interests.”
4. Overconfidence & misplaced trust
   Because LLMs are good at generating fluent, confident text, people may overestimate their reliability.
5. Potential for financial loss
   Applying generic or inappropriate advice could cost money e.g. picking wrong investment vehicles or mismanaging tax implications.

The value of advice is still stronger than ever 

It can often be a daunting task for individuals to think about their financial futures. Working with a qualified financial adviser can help to alleviate the burden of worry, become better educated on their finances and receive actionable advice on how to improve their situations.

An update to the International Longevity Centre’s research showed the long-term value of advice:

• Advised individuals can be up to 24% better off after a decade compared to those who don’t take advice.
• The benefits are especially strong for those with modest wealth, proving that advice isn't just for the wealthy.
• Those who seek advice regularly (e.g. annually) see even stronger outcomes over time. 

In Summary – Guidance vs Advice

You get what you pay for, and when it comes to your lifetime savings and financial future, that advice could make all the difference.

Start with a free, no-obligation consultation

If you’re thinking about the next stage in your financial journey and want trusted, independent advice, get in touch to arrange your free consultation with a qualified adviser. 

At The Private Office, we offer chartered, independent, whole-of-market advice, recognised as the gold standard in the industry. If you have £100,000 or more in pensions, savings or investments, you can start with a free initial consultation (worth £500) with one of our regulated Financial Advisers.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate tax advice or cashflow modelling.

The prospect of living to 100 is a concept that has evolved from a distant dream into a tangible reality for a growing number of people. While modern medicine and healthier lifestyles have made it possible to live longer, the question of whether our finances can keep pace with our longevity is a critical one. For many, the traditional notion of retirement at 65 followed by a relatively short period of relaxation is a thing of the past. The increasing life expectancy coupled with the complexities of the modern world are prompting us to rethink our financial futures. The challenge is not just to live a long life, but to ensure that it is a comfortable one, free from financial worry.

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The changing landscape of retirement

The traditional retirement we all plan for is undergoing a significant change. The dual factors of increasing life expectancy and the recent rising cost of living have turned the conventional wisdom on its head. Retirement is no longer a fixed point in time but a new phase of life that could span thirty or even forty years. This extended period requires a more robust financial plan than was previously necessary. The era of retiring and simply living off a single fixed income for life is fading, as we all look forward to a longer and in many cases more active retirement. 

Instead, individuals are seeking a diverse stream of incomes from various sources to support a new, longer retirement. This could include a combination of pensions, investments, and even part-time work to supplement savings. The rise of the gig economy and flexible working arrangements has also enabled more people to continue earning a living well into what would have traditionally been considered their retirement years. This shift in mindset is not just about necessity; it is also about a desire to remain active and engaged with society.

What you need to live on

The figures from the Office for National Statistics* reveal that the number of centenarians in England and Wales has reached a record high. This demographic shift has important implications for financial planning. It means that the pension pot we build during our working lives may need to stretch for an additional two decades or more. Consider the difference a single decade can make. Our calculations highlighted that a couple needing an income of £25,000 per year from their pension pot only may need a pension value of around £425,000 for a retirement that lasts 20 years, but that same couple would need an additional £159,000 just to last them until the age of 100. The reality for many is that the state pension alone provides a basic safety net but falls well short of supporting a comfortable lifestyle in retirement. 

As we look at the latest Retirement Living Standards** data from the Pensions and Lifetime Savings Association, or PLSA, it becomes clear that building your own wealth is crucial. For a single person to achieve a minimum standard of living, which covers all their basic needs with some left over for fun, they would require an income of £13,400 a year. To reach a moderate standard, allowing for more financial security and flexibility, the figure rises to £31,700 a year, while a comfortable lifestyle requires an annual income of £43,900. For a two-person household, the figures are £21,600 for a minimum standard, £43,900 for a moderate one, and £60,600 for a comfortable lifestyle. This is a clear reminder that we need to take control of our financial futures and ensure that we are saving enough for the lifestyle we desire in retirement.

The family factor

As financial pressures grow, an increasingly common phenomenon is the 'bank of mum and dad'. While it might seem like a simple way to help a child get onto the property ladder or pay for a grandchild's education, the financial support offered to the younger generation is putting a significant strain on the retirement savings of their parents. Many well-meaning parents are using their own hard-earned pension pots to assist their children and in doing so are affecting their own financial security. 

This act of generosity can inadvertently create a new layer of risk for their own retirement plans. The money that was carefully set aside for their later years is being used for immediate family needs, reducing the total wealth available to them when they stop working. This places even greater importance on having a comprehensive and forward-looking financial plan that accounts for both your own needs and the needs of your family, without compromising your own long-term wellbeing. This intergenerational financial pressure highlights the need for a holistic approach to financial planning, one that considers the entire family's financial health and requirements, not just that of the individual.

Planning for the future

For most people, the idea of living to 100 is intimidating from a financial standpoint. The question of whether you can afford to live that long often feels like a difficult one to answer. This is where the true value of financial planning comes into its own. At its heart, financial planning is not just about numbers; it is about providing peace of mind. A good financial plan will provide a clear and concise visual picture of your financial future, helping you to understand the impact of your decisions on your wealth over time. 

For us at The Private Office, cash flow planning is central to how we work with our clients. We begin by gaining a deep understanding of your current financial situation, including all your sources of income, capital and your expenditures. We use this detailed information to create a dynamic cash flow model that illustrates what your financial future might look like for you under different scenarios. This approach allows us to test your wealth against potential events like a market downturn, higher than expected inflation, a long-term health issue, or unexpected expenses. It also gives us the opportunity to see how your wealth can support you to achieve your life goals such as funding your children’s education, renovating your home, or retiring earlier than planned. By providing this comprehensive visual overview, we can work together to ensure you have the financial freedom to live a long and fulfilling life.

Use our retirement calculator

No one has a crystal ball. But what you do have is a range of tools that can help you understand whether your plans are on track. Our retirement calculator is one of the most useful, especially if you’re hoping to retire at 55.

By inputting your current savings, your target retirement age, and the income you’d like to receive, our retirement calculator can provide an estimate of how long your money might last – and what you’d need to contribute to reach your goal.

Retirement Calculator

A useful tool to get a basic understanding of what your future retirement plans look like is our retirement calculator. From your own personal circumstances , you will be able to forecast an estimate of the pension income you will get when you retire and receive a target retirement income to aim for based on your choices.  

It’s important to remember that these tools are only as accurate as the assumptions they’re based on. Investment growth, inflation, life expectancy and future tax rules are all variables. But using a calculator is an excellent way to create a picture of what your retirement might look like – and how close you are to achieving it. This is not guaranteed and is for illustrative purposes only.

How we can help you

A comprehensive financial plan allows you to make informed decisions about your future with confidence and clarity. Living to 100 may seem like a distant challenge, but with the right financial planning and advice, it is a future you can look forward to. We’re offering anyone with £100,000 or more in savings, pensions or investment a free retirement review, worth £500. Why not get in to speak to one of our team for a free initial consultation.

Sources:

* Office for National Statistics

** Retirement Living Standards

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

A pension is a long-term investment. The value of an investment and the income from it could go down as well as up.  The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The Financial Conduct Authority (FCA) does not regulate tax advice or cashflow modelling.

For many people, retirement is no longer a fixed date, but a gradual process shaped by lifestyle choices, financial goals, and personal wellbeing. There’s no one-size-fits-all answer to how much you should save for retirement, but with thoughtful planning and the right strategy, you can move forward with clarity and confidence.  

Understanding your future financial needs and the options available for building a retirement fund is essential, particularly if you hope to maintain a moderate or comfortable standard of living in your later years.

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While the concept of retirement has evolved, the fundamentals remain the same, at some point, you will need to replace your employment income with alternative sources. These might include a personal pension, workplace pensions, savings, investments, or property income. For those who are already financially secure or moderately wealthy, retirement planning is not about meeting basic needs but maintaining current standard of living, financial independence and, in some cases leaving a legacy.

What lifestyle do you want in retirement?

One of the most personal aspects of retirement planning involves envisioning the lifestyle you hope to enjoy once you stop working. You may be considering whether to remain in your current home or downsize, whether to travel more frequently, spend additional time with family, or pursue hobbies that could come with added costs. These lifestyle choices will significantly influence the level of income you will require in retirement and should be central to any long-term financial planning.

The Pensions and Lifetime Savings Association (PLSA) provides useful guidelines through its Retirement Living Standards, which outline three levels of retirement living: minimum, moderate, and comfortable. According to the most recent figures, a single person would need around £13,400 per year for a minimum standard of living, £31,700 for a moderate one, and £43,900 for a comfortable retirement. For couples, these figures rise to £21,600, £43,900 and £60,600 respectively. These figures include essentials such as food and utilities, as well as extras like holidays and leisure activities, depending on the lifestyle level.

If your retirement plans include enjoying leisure activities, occasional travel, maintaining a comfortable lifestyle, or supporting family, you may be aiming for a retirement standard that goes beyond simply meeting basic needs. Planning for this level of financial independence requires a considered approach to saving, investing, and managing financial assets effectively over time.  

How much will you need to retire?

Translating lifestyle aspirations into a target retirement fund can be challenging. Many people underestimate how long they will live or how much income they will need to maintain their lifestyle. While the commonly cited guideline of needing two-thirds of your pre-retirement income can offer a useful starting point, it should be treated as a general reference rather than a definitive rule. A personalised approach, based on your unique circumstances and aspirations, is essential for effective retirement planning.  

Cash flow planning is a core element of retirement preparation and a key tool we use at TPO. It provides a detailed view of how your finances are expected to evolve over time by projecting income sources alongside anticipated expenses. This allows you to identify potential shortfalls, prepare for significant future costs, and ensure your savings and investments are structured to support you throughout retirement.

By modelling different scenarios, cash flow planning helps clarify complex decisions, such as how, when and where to begin drawing down on your wealth, how to adjust spending as your needs and circumstances change. It offers a dynamic framework for making informed choices and adapting your financial strategy over time.

In essence, cash flow planning acts as a financial roadmap. It gives you visibility and control, helping you maintain stability and confidence while pursuing the lifestyle you want in retirement.

At TPO, cash flow planning is a vital part of retirement preparation, and our models are designed to be ultra cautious. They account for realistic, but conservative rates of return on investments, inflation, potential long-term care costs, and a contingency fund for unexpected expenses. By using conservative modelling, our cash flow planning provides a realistic and resilient framework to help ensure your savings last, your lifestyle is supported, and your financial future remains secure

What is the average amount saved for retirement?

Despite growing awareness around the importance of pension saving, the average amounts accumulated by the time people reach their late fifties remain worryingly low for many. Data shows that by the age of 55 to 59, women typically have around £81,000 in their pension, while men of the same age group have approximately £156,000. These figures illustrate a stark contrast in retirement readiness and highlight the ongoing issue of the gender pensions gap.

To put this into perspective, if someone were to begin drawing down £11,000 annually from a pension pot of £81,000 from age 67, their savings would last just seven years. For a man with £156,000, the same level of withdrawals could stretch over 17 years. This is before taking into account any additional costs or lifestyle choices, and even with the State Pension added in, the income may fallshort of supporting a moderate or comfortable standard of living throughout a typical retirement.

There are many factors that contribute to disparities in pension savings, often reflecting broader patterns and inequalities in the workplace. Career breaks or part-time work taken for personal or family reasons can naturally impact earnings and reduce opportunities to build pension wealth over time. Understanding these influences is key to developing financial plans that are inclusive, flexible, and tailored to individual circumstances ensuring everyone has the opportunity to build a secure and fulfilling retiremen

How much do people spend in retirement?

Actual spending in retirement varies widely, but research consistently shows that spending patterns tend to follow a curve. Many retirees spend more in the first decade after leaving work, while they are still healthy and active, before costs gradually decline. However, in later life, care costs or health-related expenses can cause a second rise in spending.

The PLSA’s Retirement Living Standards (mentioned above) offer a helpful breakdown of what each level of spending supports. At the moderate level, for example, a couple might afford a week-long European holiday and a long weekend in the UK every year, own a car, and spend around £100 per week on food. At the comfortable level, that might extend to three weeks of holidays abroad annually, regular dining out, and higher quality clothing and home maintenance.

Understanding your likely spending habits can help you build a retirement plan that reflects your real-life needs, rather than an arbitrary benchmark.

What options are there for saving for retirement?

There are a number of avenues available when it comes to saving for retirement, and often the most effective strategy involves a combination of different approaches. Workplace pensions, particularly those with employer contributions, remain one of the most powerful tools for building a retirement pot. Auto-enrolment has helped millions of people start saving, but those with higher incomes may want to increase contributions well above the minimum level.

Personal pensions such as Self-Invested Personal Pensions (SIPPs) offer greater control and flexibility, particularly for those with more complex financial situations or larger sums to invest.  

ISAs can also play a useful role, offering tax-free growth and flexible access, which can be particularly valuable for early retirement or to fund specific goals outside of pension rules.

Other investments such as general investment accounts and investment bonds can also be part of a retirement strategy, though they may not offer the same tax advantages as pensions or ISAs.

For business owners, company profits and assets can also be used to support retirement goals.

Investments in property or other assets may also form part of a retirement plan, though they carry their own risks and responsibilities.

In summary, a balanced and well-considered approach, tailored to your lifestyle, priorities, and future plans, is essential for building a secure and sustainable retirement. By combining different savings, investment and pension vehicles and regularly reviewing your strategy, you can create a financial foundation that supports both your needs and aspirations throughout retirement.

Start planning early but review often

Starting your retirement savings early can make a significant difference, thanks to the power of compound growth over time, even small contributions made consistently can grow substantially. However, retirement planning isn’t a one-off exercise. Your goals, lifestyle, and financial circumstances will naturally evolve, and your plan should evolve with them.

Regular reviews are essential to staying on track. This includes monitoring the performance of your pension and investments, reassessing your intended retirement age, and checking whether your savings are aligned with your future needs. By doing so, you maintain control and can make informed adjustments as needed.

At TPO, our approach will help you navigate changes with confidence. We aim to provide clarity and flexibility, ensuring your retirement strategy remains robust and responsive throughout your life.

Getting the right advice

While there are many tools and calculators available to help you estimate your retirement needs, the decisions involved can be complex. How to draw down your pension tax efficiently, how to invest in later life, and how to prepare for unexpected costs such as care all involve detailed planning. For those with a moderate to comfortable level of wealth, speaking with a regulated financial adviser can help you avoid costly mistakes and tailor a plan to your specific situation. 

Arrange your free initial consultation

This article is for information only and does not constitute individual advice. The information provided in this article is based on the current allowances and legislation and is subject to change.

The Financial Conduct Authority (FCA) does not regulate cashflow modelling, trust or tax advice.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

The Government, following consultation, has now confirmed legislation on a significant change to how pensions will be treated for inheritance tax (IHT) purposes. 

From April 2027, most unused pension funds will count as part of a person’s estate when they die. This means that for the first time, inheritance tax may be due on pension pots left to loved ones. It marks a major shift in how pensions are used in estate planning and will have important consequences for those who had hoped to pass on their pension savings free of Inheritance tax.

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This will be of particular concern to those with larger pension pots or those who have been deliberately preserving their pensions to pass on their wealth. If that’s you, or someone in your family, it’s well worth taking time now to think about how to adapt your financial planning strategy. Speaking to your financial adviser will help clarify what steps you should take.

Who will be responsible for the reporting and payment of inheritance tax on unused pension funds?

Before consultation, the government proposed pension scheme administrators (PSAs) should both report and pay IHT on unused pension funds. After feedback following the consultation, the policy was changed so that personal representatives (i.e estate executors or administrators) will be responsible for reporting and paying IHT on unused pension funds - in line with standard inheritance tax procedures. Payment will be a joint and several liability with the beneficiaries, once death benefits are appointed to specific beneficiaries.

A new scheme will be established which will allow beneficiaries to request payment of IHT liabilities to HMRC directly from the pension fund (like the direct payment scheme), but the payment will be limited to liabilities due on pension funds and not the entirety of the estate. More details are awaited on the scheme. In addition, this change means that pension scheme administrators will be able to distribute benefits from the pension fund to beneficiaries before probate is obtained on the deceased's estate.

This does add a layer of administrative complexity post death and does mean that if you hold pensions benefits across a variety of different providers it could create a headache for your personal representatives and hinder speedy settlement of benefits. Where appropriate, consolidating existing pension pots during your lifetime into one provider will certainly help ease this process.  

Will my spouse or civil partner be subject to an IHT liability when inheriting my pension?

The scope of what types of pension benefits will be included in the new IHT regime has been confirmed and we now know that unused pension funds passed to a surviving spouse or civil partner will be exempt. Payments from death in service benefits, if you die whilst employed, are also exempt, even if they are written under a pension trust. Also scheme pensions paid from an occupational scheme to a surviving spouse or joint life annuities, where the income continues to be paid to a surviving spouse or civil partner, are also exempt.

Will beneficiaries face both inheritance tax and income tax on inherited pensions?

Potentially, yes. From April 2027, the value of the unused pension will form part of the estate for IHT purposes. If the deceased was aged 75 or over, any money their beneficiaries withdraw from the pension will also be subject to income tax. That means in some cases, the combination of inheritance tax and income tax could result in a significant chunk of the pension pot being lost to tax. In certain instances, the total tax take could reach as high as 67%.

Should people use their pensions during their lifetime instead?

It’s a question many will be asking. If a pension is likely to face inheritance tax when they die, does it make sense to start drawing from it now? The answer isn’t straightforward and needs to be considered on a case-by-case basis.  On the one hand, reducing your pension before death could lower the potential IHT liability. On the other hand, taking large withdrawals now might push you into a higher income tax bracket, especially if you’re still working or have retired with significant defined benefit pensions in payment. You’ll also need to think about whether you might need those funds later in life. Advice tailored to your specific requirements will be required to ensure that you make a fully informed decision in this regard.

Could annuities be part of the answer?

One option that may be worth considering is using part or all of your pension to buy an annuity. This turns your pension into a guaranteed income during your lifetime, which means there would be less left over in your pension pot to be subject to IHT post death.

Annuities aren’t for everyone, but they can, especially later in life, provide peace of mind and help reduce inheritance tax exposure at the same time. What’s more, annuity rates are generally higher for older individuals, which makes them potentially more attractive for clients aged 75 and over.

However, once again, suitability is down to your own individual circumstances and will require individual advice.  It should be noted that certain features which can be added to annuities are already subject to IHT e.g. guarantee periods and valuation protection payments, unless paid under discretionary powers.

Could insurance help cover the inheritance tax bill?

Another strategy might be to take out a whole of life insurance policy, written in Trust, designed specifically to cover the inheritance tax due on your pension. This means your beneficiaries effectively receive the full value of the pension, and the tax bill is paid separately from the insurance proceeds. You could even consider using pension withdrawals to fund the insurance premiums – although this too could trigger income tax, so it’s important to weigh up the costs and benefits carefully. It’s not a one-size-fits-all solution, but it could be worth exploring as part of a broader plan.

Family tax planning strategies

Planning as a family can make a real difference. For instance, if you have more income than you need to live on, you could potentially use the ‘normal expenditure out of income’ exemption to gift money each year without it being counted for inheritance tax. Children could then use those gifts to make their own pension contributions. If they’re higher rate taxpayers, they’ll also benefit from income tax relief over and above the basic rate relief received automatically at source.  In effect, this helps reclaim the tax you’ve paid on your pension income into tax-efficient savings for the next generation.

Coordinating this kind of plan with a solicitor ensures everything lines up with your will and long-term succession goals.  It will also be necessary to take specialist tax advice when seeking to use the ‘normal expenditure out of income’ exemption.  

Looking ahead

This change to inheritance tax on pensions is one of the most important shifts in estate planning in recent years. It brings pensions into line with other assets for tax purposes and will impact many families who had relied on them as a tax-free way to pass on wealth. While the new rules may feel like a blow, there are still a number of ways to plan effectively. Whether it’s exploring annuities, considering insurance, or using income to support family gifts, there are strategies available.

The key is to start planning now for 2027. Speaking to your financial adviser will help you understand the best course of action based on your age, pension size, and goals for your estate. With the right approach, it’s still possible to make your pension work hard for you and your family – both now and in the future.

If you’d like to learn more about how we can minimize the potential tax bill on your estate, why not get in touch for a free initial consultation.

Arrange your free initial consultation

This article is for information only and does not constitute individual advice. The information provided in this article is based on the current allowances and legislation and is subject to change.

The Financial Conduct Authority (FCA) does not regulate trust or tax advice.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

Planning for retirement can be one of the most rewarding and reassuring steps you take for your financial future. One of the most common and important questions people ask when approaching retirement is: how long will my pension last? This question does not have a simple answer. It depends on a wide range of personal circumstances, financial goals, spending habits and, of course, how long you live. That is why it is essential to consider your unique situation carefully, and for many, professional financial advice can make a significant difference in ensuring peace of mind.

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How long will my pension pot last?

The longevity of your pension pot depends on a number of factors. The total value of your pension savings at retirement is only part of the equation. What also matters is how much you withdraw each year, whether your pension remains invested, the performance of those investments, and how inflation affects your spending power over time. Charges on your pension should also be considered as these will reduce the potential growth on your pension pot.

If, for example, you retire with a defined contribution pension, you have flexibility over how much to take and when. You may choose to draw a regular income, take lump sums, or buy an annuity. However, with flexibility comes responsibility. Withdrawing too much too soon, or not accounting for inflation, could mean your pot runs out earlier than planned. On the other hand, if you draw less than you need out of fear, you may find you are unnecessarily limiting your lifestyle.

This is where detailed financial forecasting becomes critical. Understanding how long your pension pot might realistically last under different scenarios requires a clear view of your spending needs and how those might change throughout retirement.

There is of course the option to secure a guaranteed income for life from a flexible defined contribution pot (an annuity), in which case this income would be paid for the rest of your life. The amount of income secured would be based on your age, health, value of the pension pot being exchanged and prevailing interest rates.

What is your life expectancy?  

A fundamental part of estimating how long your pension needs to last is understanding life expectancy. According to the Office for National Statistics, the average life expectancy in the UK is currently around 79 years for men and 83 years for women. However, it is important to remember that these are averages. Many people may live well beyond these ages, particularly if they reach retirement age in good health.

This uncertainty highlights the importance of planning for a potentially long retirement.  At The Private Office, cash flow planning plays a vital role. It is a method of mapping out your income and expenditure over time, using realistic assumptions about investment returns, inflation, and life expectancy. This modelling can help identify if your current pension savings are likely to be sufficient, and what adjustments may be needed to stay on track.

Factoring in a longer life expectancy than the average can be a prudent approach. After all, running out of money in later life can be one of the most significant risks to your financial security.

How much retirement income do you need?

Understanding how much you are likely to spend in retirement is another key consideration. The Retirement Living Standards, developed by the Pensions and Lifetime Savings Association (PLSA), offer a useful benchmark to help individuals gauge how much income they might need.

According to the latest figures, a single person needs around £14,400 a year for a ‘minimum’ standard of living in retirement. This covers all essentials, including food, utilities and some social activities.  

For a ‘moderate’ lifestyle, the figure rises to £31,300. This allows for more frequent meals out, holidays in Europe, and increased financial security.  

A ‘comfortable’ retirement requires around £43,100 a year, enabling more luxuries such as long-haul travel and regular leisure activities.

These figures help to put your own retirement aspirations into context. If you hope for a lifestyle closer to the moderate or comfortable standards, you will need to ensure your pension arrangements are sufficient to support that level of spending.

How long would a comfortable retirement income last?

Let us consider how long a pension pot might support a comfortable level of retirement income, as defined by the PLSA mentioned above. For a single person aiming to draw £43,100 a year, a pension pot of £500,000 may appear substantial. However, depending on how it is invested, the rate of withdrawal, and future inflation, it could run out in less than 15 years if withdrawals are not managed carefully.

If that same pension pot remains invested and generates returns over time, it may last longer. However, the likelihood is you’d need at least £800,000 or more to cover a comfortable retirement. To do this on a smaller pension pot you would need to introduce a greater level of investment risk, which would need to align to your appetite for risk and be suitably managed in retirement. Moreover, drawing from your pension during a period of poor market performance (known as sequence risk) can have a lasting negative impact on the sustainability of your income.

This illustrates why it is not just the size of your pension pot that matters, but how you draw income from it and how you manage risk. Professional advice can be invaluable in helping you model different scenarios, avoid common pitfalls, and make informed decisions.

The role of the state pension and other income

It is worth noting that your pension savings are unlikely to be your only source of income in retirement. For most people, the State Pension will provide a foundation. As of 2025, the full new State Pension pays just over £11900 per year. While this goes some way towards covering basic living costs, it is unlikely to support a moderate or comfortable retirement on its own. The state pension does however reduce the income requirement from your private pension provision, and in turn the level of pot you will require at outset.  It’s always worth noting that the age at which you can access the state pension is rising from 66 to 67 next year and gradually increasing to 68 between 2044 and 2046.

Other income sources such as workplace pensions, rental income, investments or part-time work can also play a part. When considered together, these income streams form a broader retirement income picture. Taking the time to understand how all these elements interact can help you build a more resilient retirement plan.

The value of planning ahead

Whether retirement is just around the corner or still a few years away, taking the time to plan ahead can provide you with confidence and financial security. Identifying your likely income needs and considering different income strategies can all help you feel more in control of your financial future.

Of course, these decisions are not always straightforward. Tax implications, investment risk, inflation and changing personal circumstances can all influence the outcome. This is why many people benefit from seeking professional financial advice. An experienced adviser can help you make informed choices, build a personalised retirement plan, and adjust it over time as life changes.

Ultimately, the question of how long your pension will last is not just about numbers. It is about your lifestyle, your goals, your peace of mind. With the right planning, and the right support, you can look to the future with greater confidence, knowing your retirement income is designed to last as long as you need it to.

If you’d like to learn more about how we can help you with the retirement you want, why not get in touch for a free initial consultation. 

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This article is for information only and does not constitute individual advice. The information provided in this article is based on the current allowances and legislation and is subject to change.

The Financial Conduct Authority (FCA) does not regulate cash flow planning or tax advice.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

Retiring at 55 is an appealing prospect. Many people dream of stepping away from work while they’re still active enough to enjoy their newly afforded free time. But while the desire may be common, achieving it is something altogether more complex. Early retirement means giving up years of income and stretching your savings and investments over a longer retirement. For some, this can be done. For others, it may require a more nuanced approach.

So, what does retiring at 55 really take? And how do you know if it’s possible for you?

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How much do you need to retire at 55?

The answer to this depends on not just your retirement savings but also on the lifestyle you want to lead once you’ve stopped working. Recent figures from The Pensions and Lifetime Savings Association looked at average retirement income in a more lifestyle focused manner.  The groups are split into Minimum, Moderate and Comfortable with a single person varying between an income of £13,400 a year for a minimum retirement to £43,900 a year for a comfortable retirement. For a couple these figures varied from £21,600 to £60,600 respectively.

But retiring at 55 has many additional challenges. Unlike those retiring at state pension age, you may need to support yourself entirely from your own savings for at least 12 years or more, depending on when you qualify for the state pension to supplement your savings. The state pension is unlikely to cover all your needs. The full new state pension currently pays around £11,973 a year as of April 2025, provided you’ve paid at least 35 years of qualifying National Insurance contributions. Until then, your private pension, ISAs, savings, or other investments will need to do all the heavy lifting.

Can I afford to retire at 55?

You may already have a decent pension pot and additional investments. You may own your home outright or have other sources of income, such as rental property. But even with a solid base, it’s vital to understand whether your money will last.

One of the common challenges early retirees face is the temptation to draw too much too soon. The earlier you access your pension, the longer it needs to last – and the more vulnerable it becomes to poor investment performance or inflation. If you withdraw too aggressively during a market downturn, you risk depleting your pot much faster than expected. This is known as sequencing risk and you can read more about it here.

There’s also the issue of timing. From 2028, the minimum age for accessing defined contribution pensions will rise from 55 to 57, unless you have any existing pension age protections in place. If you turn 55 after this point, your earliest retirement date may be later than you expect. And if you were planning to use your pension as your main income source, this could impact your strategy.

It's worth considering whether full retirement is even what you really want. Semi-retirement, perhaps reducing your hours, freelancing or consulting, can give you more flexibility.

Use our retirement calculator

No one has a crystal ball. But what you do have is a range of tools that can help you understand whether your plans are on track. Our retirement calculator is one of the most useful, especially if you’re hoping to retire at 55.

By inputting your current savings, your target retirement age, and the income you’d like to receive, our retirement calculator can provide an estimate of how long your money might last – and what you’d need to contribute to reach your goal.

Retirement Calculator

A useful tool to get a basic understanding of what your future retirement plans look like is our retirement calculator. From your own personal circumstances , you will be able to forecast an estimate of the pension income you will get when you retire and receive a target retirement income to aim for based on your choices.  

It’s important to remember that these tools are only as accurate as the assumptions they’re based on. Investment growth, inflation, life expectancy and future tax rules are all variables. But using a calculator is an excellent way to create a picture of what your retirement might look like – and how close you are to achieving it. This is not guaranteed and is for illustrative purposes only.

How to really look into your financial future

While calculators give you a high-level snapshot, cash flow forecasting takes your planning a step further. It is a more personalised approach that helps model your financial future in detail.

A cash flow forecast looks at all aspects of your income, spending and assets, both now and in retirement. It takes into account your savings, pensions, investments, property, and any planned large expenses, like helping children with a house deposit or taking a round-the-world trip.

What makes it powerful is that it’s dynamic. With the help of your financial planner, you can run scenarios to see how your financial position changes if you retire earlier, downsize your home, delay your state pension, or take lump sums from your pension. You can also test the impact of market downturns, inflation spikes, or a longer-than-expected retirement.

This kind of planning gives you greater confidence in your decisions. Rather than relying on rules of thumb, you can understand exactly what is affordable – and what changes might be needed to get there.

At The Private Office, we believe cash flow forecasting is a key part of any long-term financial strategy. It provides a visual projection of your financial life, highlighting when and where gaps might arise and helping you take action early to avoid them.

Pension drawdown or annuity – which is best for early retirees?

If you’re planning to retire at 55, it’s likely you’ll be managing your pension using drawdown rather than buying an annuity. Drawdown allows you to keep your pension invested while taking income as needed. This offers more flexibility, especially for those who expect their income needs to change over time.

However, it also means more responsibility. You’ll need to keep an eye on investment performance, monitor your spending, and ensure your pot lasts. For some, this can be daunting, and this is where advice becomes so valuable.

Annuities, on the other hand, offer peace of mind through guaranteed income for life in exchange for flexible access to a ‘pot of money’. But if you buy one at 55, the rates are generally much lower than if you wait until your 60s or later. For that reason, many early retirees opt to draw down first, possibly considering an annuity later on when the rates become more attractive or even a combination of the two later in life.

Is early retirement realistic for you?

For some people, retiring at 55 is entirely realistic. For others, it might require adjustments to spending, saving more in the years ahead, or even considering part-time work to bridge the gap.

What’s most important is having a plan. That plan should be based on careful analysis, not guesswork. It should be flexible enough to adjust when life changes. And it should take account of your goals and values, not just the numbers.

Seeking financial advice can play a critical role here. We can help you define your goals, assess your current position and build a strategy that puts you on the right path, whether that means retiring at 55, or simply retiring with confidence, whenever the time is right for you.

We’re currently offering those with £100,000 or more in cash, investments or defined contribution pensions a free cash flow forecast review worth £500. For more information why not get in touch.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning or tax advice. 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

According to the latest figures from The Office for Budget Responsibility (OBR), the state pension triple lock is forecasted to cost the government three times more than the original estimate by 2030, with the annual cost of the triple lock policy potentially reaching £15.5bn.  

In response to the report, the government said it was "committed" to the current policy.

"We are committed to supporting pensioners and giving them the dignity and security they deserve in retirement", a Treasury spokesperson said.

However, the OBR stated the UK's public finances were in a "relatively vulnerable position" owing to pressure from recent government U-turns on planned spending cuts.

Despite the assurances, speculation is rife about the possibility of a triple lock rollback, especially following the recent rumours and speculations around Rachel Reeves’s plans to cut the Cash ISA in her upcoming Mansion House speech on 14th July 2025.  

The cost of the state pension has risen steadily over the past eight decades, from around 2% of  UK GDP  to a current 5%, equating to £138bn, and is forecast to increase to 7.7% of the economy by the early 2070s. According to the OBR, spending on the state pension has gradually been creeping up as an ever increasing proportion of people are living longer and above the state pension age in the UK.  

In an effort to counter this, not only is the triple lock under threat of being changed or even scrapped, but The Department for Work and Pensions (DWP) recently confirmed that the state pension age will increase from 2026 with the change being gradually introduced over a year in an effort to reduce the proportion of people receiving state pension.

At present both men and women are eligible to claim the state pension upon reaching 66, but from next year this age will rise to 67.

The ‘triple lock’ explained

The pension ‘triple lock’ refers to a well-known state pensions policy that ensures state pensions rise every year by either the average earnings growth, inflation (as measured by the Consumer Prices Index) or a flat 2.5% - whichever is highest that year, hence the name ‘triple’ lock.  

It was designed in principle to make sure that state pension value would always have the best growth outcome each year for tax payers. The guarantee that the highest of the three will be what pensions grow against ensures that pensioners have three layers of protection against inflation, hence the name ‘triple lock’. This is incredibly important in maintaining a level of healthy financial security for those relying on their pensions, as it guarantees growth irrespective of how volatile the economy becomes.

With the triple lock potentially under threat and the state pension age on the rise, it’s more important than ever to manage your retirement plans carefully to ensure you don’t get caught out. If you want to find out more about how you can plan ahead and navigate these changes, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to find out how we might be able to help you. 

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash or tax advice. 

When thinking about retirement, many people focus on how much they’ve saved. But just as important is how that money is invested. Pension investment funds play a vital role in shaping the lifestyle you will enjoy in your later years. Making the right decisions today could mean the difference between just getting by and living comfortably throughout retirement. If you are unsure where to begin, understanding your options and how they align with your personal goals is a key first step.

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Making sense of your options

Navigating the landscape of pension investment funds can feel overwhelming. With thousands of funds available, including active and passive strategies, thematic investments, ethical funds and more, the choice is vast. Selecting the most suitable pension investment funds will depend on your unique circumstances, and no single option is right for everyone.

Some investors prefer actively managed funds, where managers hand-pick investments with the aim of outperforming the market and minimising losses with the potential to make a higher return than the average. Others might choose passive funds, which track an index or market rather than trying to beat it and tend to have lower costs. Each approach has its merits, and in many cases a blend of both can be appropriate.

No matter how you choose to invest, the key is to ensure your pension is not left on autopilot. Markets evolve, economic conditions shift, and your personal situation will change over time. Keeping your pension aligned with these developments is essential to giving yourself the best chance of a financially secure retirement.

What is your attitude to risk?

Before deciding where to invest your pension fund, it’s crucial to understand your attitude to risk. Everyone has a different threshold. Some people are more comfortable with the ups and downs of markets, while others prefer the relative stability of more conservative investments.

Your tolerance for risk may depend on a number of factors, including how long you have until retirement, your wider financial situation, and your personal experiences. If you are younger and still several decades away from retirement, you may feel comfortable taking on more risk in exchange for the potential of higher returns. As you get closer to accessing your pension, you may prefer to reduce your exposure to volatility.

When considering risk, it’s important to take emotion out of the equation. Emotional investing, where decisions are driven by fear, anxiety or overconfidence, often leads to poor outcomes. Market fluctuations can tempt investors to make impulsive changes, such as selling during downturns or chasing returns during rallies. These reactions can often do more harm than good. A well-thought-out strategy that matches your true risk tolerance and overarching financial plan will serve you far better than one driven by how markets make you feel at any given moment. Removing emotion helps you stay focused on your long-term objectives and avoid knee-jerk reactions that could undermine your retirement goals.

Investment risk in pension fund portfolios is largely unavoidable, but it can be managed. By aligning your investment choices with your risk profile and timescales, you can create a more resilient pension plan. Speaking to a financial adviser can help to determine an appropriate risk profile and strategy and empower you to make confident decisions that suit your needs.

Where are your pension savings currently invested?

Many people are unaware of where their pension savings are actually invested. If you are enrolled in a defined contribution pension scheme, your contributions, along with those from your employer, are invested in pension funds. These can include a mix of equities, bonds, commodities, property and cash.

A suitable pension investment fund would typically be diversified across different regions and asset types to help reduce the impact of any single area performing poorly. You may already be in a default lifestyle fund, which gradually shifts your investments to lower-risk options as you approach retirement. Whilst seemingly convenient, it’s worth reviewing if this strategy is truly the right fit for your specific goals, timescales and prevailing market conditions.

Looking into where your pension is invested can reveal opportunities to improve potential outcomes. If your current fund has not performed in line with similar alternatives, or if the risk profile does not suit your current circumstances, it may be time to explore other options.

How you plan to take your pension

How you intend to draw on your pension in retirement may have a significant influence on how it should be invested now and in the glidepath towards retirement Some people will want to take a tax-free lump sum and buy an annuity, which guarantees an income for life but offers limited flexibility. Others might prefer pension drawdown, which allows you to keep your pension invested and flexibly withdraw income as needed.

Each of these options carries different levels of investment risk and potential reward. An annuity typically removes investment risk altogether but might provide a lower income, particularly when interest rates are low. Drawdown keeps your pension exposed to the market, offering the possibility of capital growth even in retirement, but with the risk of loss if markets or investments perform poorly.

By understanding your likely income needs and how flexible you want your retirement income to be, you can better match your pension investments to your plans. Receiving professional advice on the options and considerations can be extremely valuable, as the decisions you make now may have lasting consequences.

When do you plan to access your pension?

Your investment choices should take into account the time horizon until you need to start drawing on your pension. If retirement is 20 or 30 years away, you may consider a growth-oriented strategy, as the longer-term time horizon allows you to ride out short-term fluctuations. For those closer to retirement, capital preservation becomes more of a priority.

Timing also affects your exposure to investment risk. Markets and investments may perform unfavourably at the point you begin to withdraw income. If your portfolio suffers a decline just before or during the early years of retirement, the impact on your overall pension pot can be significant.

This is referred to as “sequencing risk” and highlights the importance of reviewing your pension strategy regularly and creating a financial plan. A carefully managed transition from higher to lower risk assets, known as de-risking, is often used to address this concern. Some pension funds do this automatically, but it is not always tailored to your specific plans.

The sooner you engage the better

Deciding where to invest your pension funds is not something to put off until the future. The sooner you engage with the options available, the more control you can have over your financial future. Understanding your attitude to risk, the structure of your pension plan, and how and when you expect to retire are all crucial to making informed choices.

Whether you are seeking long-term growth or greater stability as you approach retirement, there are solutions available. The challenge is identifying what is right for you. Exploring where to invest your pension fund and reviewing the investment risk and suitability of the current strategy should be a regular part of your financial planning.

Speaking to an independent financial adviser can help you gain clarity, avoid common pitfalls and put in place a strategy that evolves as your life does. It is never too early or too late to take control of your pension. The future you want could depend on the actions you take today.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash or tax advice. 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

Over the past few years, millions of people across the UK have found themselves quietly paying more tax, even if they haven’t seen a single change to their tax rate. This subtle yet powerful shift in the nation’s tax landscape has not been driven by headline-grabbing announcements, but rather by what are commonly referred to as “stealth taxes.” These measures raise government revenue not through overt rate increases, but via frozen thresholds and shrinking allowances, often going unnoticed until the financial pinch begins.

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A surge in pensioners paying higher tax

New figures obtained from HM Revenue and Customs under the Freedom of Information Act reveal just how widespread this issue has become. According to Steve Webb, former Pensions Minister, the number of pensioners now paying income tax at the higher (40%) or additional (45%) rates has more than doubled in just four years. In 2021/22, around 494,000 pensioners were affected; today, that number has surpassed one million.
Even more revealing is the total number of pensioners paying income tax at any level. This has risen from 6.7 million to 8.8 million over the same period, an increase of nearly a third. This is not due to tax rate hikes, but instead to frozen thresholds and rising pension income pushing more retirees into tax-paying brackets.

How fiscal drag is quietly hitting retirees

At the heart of this trend is a phenomenon known as “fiscal drag.” This occurs when tax thresholds remain static while incomes, particularly pensions, increase with inflation. The personal allowance and higher-rate threshold have both been frozen since 2021 and are expected to remain frozen until 2028. During this time, state and private pensions have risen, mainly due to inflation and the government's commitment to the triple lock.
From April 2025, the full new state pension rose to £11,973, just below the £12,570 personal allowance. This means that for anyone with a modest workplace or private pension on top of their state entitlement, paying income tax has become the norm rather than the exception.

More than just Income Tax

Crossing into higher-rate tax bands doesn’t just mean paying more on income, it also has knock-on effects for other allowances. For instance:
•    The Personal Savings Allowance is halved from £1,000 to £500 for higher-rate taxpayers.
•    The Dividend Allowance has been reduced in recent years, currently sitting at just £500 (down from £2,000 in 2022).
•    The Capital Gains Tax exemption was halved to £3,000 from April 2024, falling from a high of £12,300 in 2022/23 tax year.
For those crossing into the additional rate tax band (which was lowered from £150,000 to £125,140 in 2023/24) these allowances are cut even more sharply. In the case of savings interest, the Personal Savings Allowance is removed entirely.

Rising Tax bills for savers and investors

Stealth taxation is not just affecting pensioners. The Personal Savings Allowance has remained unchanged since it was introduced in 2016. For years, with ultra-low interest rates, this wasn't a major issue. But the tide has turned.
With the Bank of England increasing interest rates to tackle inflation, savings accounts are now generating more interest and more tax. In the 2022/23 tax year, 1.77 million people paid tax on their savings interest, up from just 970,000 the year before. HMRC reports that the amount raised from this alone more than doubled from £1.2 billion to £3.4 billion.
In the 2023/24 tax year, an estimated 1.9 million people paid tax on their savings interest, up from 1.77 million the year before and just 970,000 in 2021/22. According to HMRC the amount raised from tax on savings interest surged to a record £9.1 billion, more than double the £3.4 billion collected in 2022/23, and over seven times the £1.2 billion from 2021/22. Projections for 2024/25 suggest that over 2 million savers will pay tax on interest, with HMRC expecting to collect £10.4 billion.

A Growing Inheritance Tax catch

Another stealth tax that continues to ensnare more households is Inheritance Tax (IHT). The nil-rate band for IHT has been frozen at £325,000 since 2009. Over this time, property and asset values have risen dramatically. As a result, more estates now breach the threshold and face IHT liabilities. Although, in 2017 the Residence Nil Rate Band was introduced which permitted individuals, passing down their main residence to direct descendants, an additional allowance of up to £175,000. Meaning, for married couples/ civil partnerships up to £1million could be passed down free of IHT. However, those estates of over £2 million would be subject to tapering. You can read more about this here.

In 2024/25, IHT receipts hit a record £8.2 billion. With the freeze extended until at least 2030 and no indication of major reform, families are increasingly vulnerable to unexpected tax bills, even those with relatively modest estates.

What can be done? The case for proactive planning

While stealth taxes are largely outside of our control, their impact doesn’t have to be. With careful planning, it’s possible to reduce unnecessary tax exposure and protect long-term wealth. Strategies may include:

• Making full use of ISAs for tax-free savings and investments
• Structuring pension drawdowns to minimise tax liabilities
• Gifting assets in a tax-efficient manner to reduce IHT exposure
• Reviewing income regularly to avoid crossing thresholds unnecessarily
• Increasing pension contributions to lower taxable income through salary sacrifice.

Each individual’s situation is different, and the tax system is becoming increasingly complex. For many, professional advice can help clarify their position and create a clear, forward-looking financial strategy.

60% tax trap

For those earning between £100,000 and £125,140, the tax system becomes especially punitive. In this income band, individuals lose £1 of their tax-free personal allowance for every £2 earned above £100,000, effectively creating a 60% marginal tax rate. This stealthy threshold has increasingly drawn in middle- and upper-middle earners, particularly as it hasn’t been adjusted for inflation since 2010. Despite rising wages and fiscal drag, the government has so far resisted reform, leaving many professionals facing disproportionately high tax bills.

Staying ahead in a shifting tax landscape

As the government continues to rely on threshold freezes to raise revenue without increasing tax rates, more households, particularly pensioners, will feel the squeeze. These are not sudden shocks, but slow, creeping changes that can significantly erode financial wellbeing over time.

Understanding the full picture and taking early, informed action is key. Whether you are drawing a pension, managing savings, or planning your estate, speaking with a qualified financial adviser can help you navigate the challenges ahead and ensure your finances remain aligned with your goals.

If you’re concerned about an increasing tax burden on your wealth why not get in touch and speak to one of our financial advisers to see how we can help.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.

The information in this article is based on current laws and regulations which are subject to change as at future legislations.

A pension is a long-term investment. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.