Adviser workloads are set to 'rocket' in the build up to pensions coming into scope of inheritance tax (IHT) as concerned clients seek support with the changes, Standard Life has warned.

Its research showed that 77 per cent of financial advisers expected their workload to rise ahead of the changes coming into force in April 2027, with an average anticipated increase of 20 per cent.

Advisers estimated that around 40 per cent of clients would need a review of their existing plans.

More than three quarters (76 per cent) said their clients were concerned about the upcoming IHT change, including 30 per cent who said these concerns were very high.

For clients in the accumulation phase, worries were centred around decisions about pension contributions, with 48 per cent of advisers reporting client queries about whether they should reduce or stop contributions, while a further 38 per cent expected additional queries in the near future.

Meanwhile, the most immediate concern for clients in decumulation was around the pension fund itself.

Standard Life noted that the general principle for wealthy individuals had previously been to draw income from other investments and savings first before drawing on pensions, but the upcoming changes had “turned this assumption on its head”, prompting advisers to reassess retirement strategies and explore alternative solutions.

More than half (57 per cent) of advisers said they needed to refresh or improve their knowledge on alternative strategies, with trusts, onshore and offshore bonds, gifting, and annuities all expected to increase in popularity.

“The aftershock of the 2024 budget announcement continues to be felt across the pensions industry as the reality of pensions coming into scope of IHT from April 2027 sinks in,” commented Standard Life head of retail intermediary and private client distribution, Warren Bright.

“What might appear to be a simple change is far from straightforward and advisers are at the sharp end, supporting their clients through the change. It’s clear from our research that advisers have an uphill challenge reviewing financial plans and making adjustments for those affected before the implementation date.

“Worryingly, the long-term effect on saving behaviour remains uncertain, but it would be disastrous for the financial health of generations of savers if this change discourages them from pension saving.

“Importantly, for most people, IHT on pensions will not apply because their estates fall below the threshold.

“Pensions will continue to be one of the best ways to save for retirement, benefiting from tax-relief and employer contributions, and this won’t change under the new rules.”

---