Connected 72 - Summer 2019


• Only 1 in 3 over 55s aware of favourable changes to tax treatment of pensions • But 90% of advisers say clients aware of changes and interested in using pensions as inheritance • Opportunity to promote value of advice in wake of inheritance tax receipts doubling There is a stark split between advised clients and the wider population on awareness of the advantages of leaving pensions as an inheritance – highlighting an opportunity for advisers, according to new research. The pension freedom changes, which came into force in 2015, brought a dramatic change in how pension death benefits are taxed and gave great flexibility in cascading pension wealth tax-efficiently. And, according to the research, there is not only widespread knowledge but real enthusiasm for the changes among consumers taking financial advice. Nine in ten (90%) financial advisers surveyed say their clients are aware of the changes, with 91% also saying they have seen marked interest from clients in using pensions as a wealth vehicle for inheritance tax planning. However, awareness is much lower among the general population: 67% of over 55s Market opportunity for advisers due to public blindspot on pensions as inheritance

a big focus for many. This offers an opportunity to advisers looking to expand their customer base. If people don’t receive advice, many are likely to be drawn unnecessarily into the inheritance tax net.” The way the general population plans to pass on their assets also demonstrates the low awareness of the advantages pensions offer as an inheritance. Property is seen as king, with 92% of over 55s who plan to leave an inheritance planning to leave property. Meanwhile, 78% plan to leave cash or investments, and just 25% plan to leave their pension. It is not clear how many of the 25% have a primary focus of passing on their pension wealth, or if inheritance is a secondary factor behind their own income – meaning even this group may not be taking full advantage of the changes.

aren’t aware of these tax changes. Among higher earners (£45k+) – the most likely group to benefit from the changes – only 41% of over 55s know about the changes. With more estates incurring inheritance tax in the last decade – receipts having doubled since 2010 – and with 43% of the general public believing their property will incur inheritance tax, many people should consider the advantages of leaving pensions as an inheritance. Highlighting the advantages of using pensions as an inheritance could offer advisers a selling point to prospects, in line with the enthusiasm seen among advised clients. Andrew Tully, Technical Director at Canada Life, said: “The disconnect in enthusiasm between advised clients and the general public shows that promoting the changes for estate planning to new prospects could reap rewards. Certainly, our broader consumer findings indicate an untapped market for advisers among people who are less aware of the benefits of the changes. “The market for advice is potentially huge. Having benefited from the growth in house prices, increasing numbers of baby boomers are being dragged into the inheritance tax net. Estate planning is, or should become,

Andrew Tully Technical Director at Canada Life

Canada Life’s report on how pensions and property best fit into financing retirement and estate planning can be downloaded or ordered at

Polling conducted online between 05/11/2018 and 13/11/2018, of 100 UK-based independent financial advisers Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance Limited and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.

Government figures on Inheritance Tax receipts can be found at: https://assets. file/731610/Inheritance_Tax_National_Statistics_Commentary.pdf Data is based on quantitative research conducted by Censuswide: Polling conducted online between 05/11/2018 and 09/11/2018, of 1,000 UK adults aged over 55, who own a property and have a pension

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