Navigating the 2027 shift in retirement planning

Retirement planning in the UK is changing. As we move through 2026, advisers are preparing for a major shift that will take effect on 6 April 2027.

In this article, Andrew Teeman, Business Principal and Later Life Mortgage Specialist at Mortgage Advice Bureau, shares his perspective on what these changes mean for advisers and their clients, and how approaches to later life planning may need to adapt.

A changing landscape for retirement advice

The pension freedoms introduced in 2015 gave people more choice over how they access their retirement savings. Now, the next big change is on the horizon.

From April 2027, pensions will no longer offer the same advantages for passing on wealth. This means advisers may need to rethink how they view different assets, including property, when helping clients plan for the future.

Rethinking the role of property wealth

Equity release, particularly lifetime mortgage, has traditionally been seen as a last resort for clients who are asset rich but cash poor. That view is starting to change and today, it is increasingly used as part of a wider financial plan. For some clients, it can offer more flexibility and control over how and when they access their wealth – particularly through lifetime mortgage features such as drawdown and optional repayments.

There are a few key reasons for this shift:

• Equity release allows clients to access money tied up in their home without the immediate income tax implications that can come with taking money from a pension.
• More clients are thinking about passing on wealth during their lifetime. Releasing equity can help them support children or grandchildren, for example with getting onto the property ladder.
• Some clients are choosing to use property wealth instead of drawing on savings or investments during uncertain market conditions. This can give those invested assets more time to recover and grow.

It’s important to note that the key reasons above will reduce the amount of inheritance and could impact certain welfare benefits.

Understanding the April 2027 changes

The decision to include unused pension funds and death benefits in the estate for inheritance tax purposes is important. For some clients, this could increase the amount of tax paid on inherited pension wealth, especially when combined with the income tax their beneficiaries may need to pay.

What This means for advisers

• Personal representatives will need to report and pay IHT on pension assets. This may be complex, particularly if you can’t access the money immediately.
• Where a client dies after age 75, there may be both inheritance tax and income tax to think about. This can reduce the amount ultimately passed on to beneficiaries.
• The idea of leaving pensions untouched for as long as possible may no longer be the best option. Advisers may need to take a more balanced approach, considering property alongside pensions and other assets.

Working together across the industry

As these changes take shape, there is an opportunity for providers, regulators and advisers to work more closely together.

What support is needed

Providers will need to provide clearer reporting tools and practical support, such as inheritance tax calculators to help advisers and clients understand potential outcomes. Transparency around how tax is managed will also be important.

As later life lending becomes part of mainstream planning, clearer guidance from the regulator will help advisers navigate conversations that span both mortgages and pensions.

Maintaining strong consumer protections, such as the no negative equity guarantee, will remain key to building and keeping trust as more clients explore these options.

Meeting the needs of modern retirees

Many clients are more active, more engaged with their finances, and often supporting family members across generations. They are also starting to see their home as part of their overall financial picture, rather than something separate.

Looking ahead

As April 2027 approaches, advisers have an opportunity to take a broader view of financial planning. By considering all assets, including the main residence, advisers can help clients make informed decisions about how to fund their retirement and support their families.

This shift is not just about adapting to tax changes. It is about helping clients make the most of their wealth, now and in the future.