What has changed from April 2015 to April 2025

There is so much happening this April for businesses and individuals, so it's perhaps appropriate to look back on the enormity of the change that took place in 2015. 

If you are not in the adviser profession, this anniversary will likely have passed unnoticed but for those of us who are, April 2015 saw one of the biggest changes to pensions planning we had probably ever seen. 

So, who was affected by the new Pensions Freedoms? 

 

Back in 2015 there were 4.5million people with a defined contribution (DC) pension scheme. Your pension pot was now accessible from 55 (this will change to 57 from 2028) and you could take out as much or as little as you wanted, subject to the tax rules at the time. 

These new rules also made it easier (if you died before you were 75) to pass on your pot, tax free to your dependents. There are potentially significant changes to come in 2028, where your pension may be added to your estate for inheritance tax (IHT) calculations. IHT is not payable between spouses but imagine having a £1m pension pot that you had hoped to pass down to your children and having £400,000 of that amount taken in inheritance tax that you had neither planned for nor expected. 

 

I now have several clients who are reviewing their estate plans and considering accessing their pension benefits, including tax-free cash, where previously they had planned to leave the pension to be inherited as is. One option for legacy planning is to set up a discretionary trust where you retain control over the assets as a trustee. These trusts can benefit future generations – children, grandchildren and even great-grandchildren. Now that’s leaving a legacy! 

 

It’s never too early to plan ahead and take advice. Navigating your investments and the tax breaks/penalties without support can be costly. Overall, research has shown the last 10 years have provided clients with a level of control their predecessors would have only dreamed of with their pension pots. However, (unless you buy an annuity) you will need to steer the investment ship throughout retirement and as we know, even from recent weeks, markets will fluctuate. Having an adviser alongside you to sense check and review that your lifetime plans are on track makes sense surely?