Savers are facing delays as they attempt to access their pension cash following Chancellor Rachel Reeves’s decision to remove the inheritance tax (IHT) exemption enjoyed by retirement savings from April 2027. As reported in the Express last month canny pensioners have been looking to move £7bn out of Reeves’ reach over tax grab fears.
However, the Telegraph has reported that pension providers are currently taking three times longer to release funds after they were flooded with withdrawal requests from savers looking to dodge the Chancellor’s inheritance tax raid. In one case, a pensioner was forced to wait for two months.
Gabriel McKeown, head of macroeconomics at Sad Rabbit, said there tended to be a surge in pension withdrawal requests at the end of the tax year.
He said pensions providers antiquated processes, and “considerable bureaucracy”, meant there were always significant delays.
Daniel Hough, of wealth manager RBC Brewin Dolphin, told the Telegrpah retirees were looking to spend their savings now in the hope of reducing their inheritance tax liability.
“There are widespread delays for people looking to withdraw money from their pensions because providers have been inundated with requests since October’s Budget.
“While prior to Christmas it would typically take around two weeks from receipt of the instruction or payment request, now it is nearer to six – we even had a case where it took two months for the client to receive their cash.”
“It is no coincidence that this ties in with pensions being brought within individuals’ estates for inheritance tax purposes, from April 6, 2027. In response, many people have come to the conclusion that they would rather spend the money, so are looking to cash in on their pension savings.”
Sales of annuities soared 20% in 2024 to £7 billion as savers’ fears grow over Rachel Reeves’ introduction of inheritance tax on pensions.
An annuity allows someone to cash in their pension, using the lump sum that has been invested to buy an insurance product, which then pays out a monthly income.
An annuity means a pension is no longer invested and the only tax payable on income is income tax, if a pension income exceeds a saver’s personal tax-free allowance.
Pete Cowell, head of annuities at Standard Life, part of Phoenix Group, said Brits were increasingly choosing to access their pension now following changes to inheritance tax announced in October’s Budget.
