Navigating tax and pension changes in 2026
The pensions landscape is poised for significant change, influenced by evolving regulation, heightened consumer expectations, and the shifting economic climate. Clare Moffat discusses how, for financial advisers, these changes present both fresh challenges and new opportunities to demonstrate value to clients.
The ever-changing world of legislation and regulation
Regulatory and legislative change remains a constant in the world of pensions. Changes to inheritance tax (IHT) in relation to business and agricultural relief and the rate of dividend tax in April 2026 will impact some business owning clients, while frozen tax thresholds will continue to impact clients.
Even more clients will be affected by bringing defined contribution pensions within inheritance tax in 2027 and there will be more regulations on that to digest and explain as well. Many of the questions I’ve received in relation to IHT and pensions have been around gifting, and the good news is that there has been no change to that in the Budget. So many clients will need help to decide what they want to do; gift large or regular amounts from the pension or perhaps consider protection policies. The ongoing implementation of the Pensions Dashboard Programme is set to reach a critical point, promising greater transparency and engagement for savers. Advisers will need to ensure their clients understand how to access their pension data. There may be more scrutiny around pension transfers and suitability as well with the Financial Conduct Authority continuing to tighten standards to protect consumers.
Economic uncertainty and market volatility
The economic backdrop heading into 2026 is one of cautious optimism, but uncertainty persists. Inflation, interest rates, and geopolitical events continue to impact investment returns and annuity rates. Advisers must help clients navigate a world where drops in the stock market can cause concern. This highlights one of the non-financial benefits of a financial adviser, the ability to take worry away from clients, manage expectations, and potentially rebalance portfolios. For those clients who are near retirement or perhaps have been retired for a few years, this might also help clients to make informed decisions on what next.
The most suitable retirement income option will depend on an individual’s needs and while annuities aren’t for everyone, there are scenarios where they could be beneficial. They should be considered as part of the retirement planning process and partial annuitisation is becoming increasingly common to give some element of guaranteed income in retirement. The need for robust, ongoing advice has never been greater.
Change is inevitable, but with the right support from their advisers, clients can make confident decisions for their future. For financial advisers, 2026 is the year to shine as trusted guides, helping clients navigate an increasingly complex pensions landscape with clarity and confidence.
