Could the rush to beat the 2027 inheritance tax changes damage clients’ retirement plans?

Clients aren’t waiting for April 2027 to reconsider their pension withdrawals. Many are already taking more money out, and the increases are hardly loose change.

Research from advice firm Wesleyan found that 90 per cent of advisers have seen clients accelerate pension drawdown ahead of the inheritance tax changes due in April 2027.

The firm surveyed 300 UK-based financial advisers between 24 March and 30 April 2026. Nearly three-quarters said affected clients were increasing withdrawals by between 5 and 15 per cent. A further 18 per cent had seen increases of more than 16 per cent.

The figures confirm what many advisers will already be hearing in review meetings. Clients are worried about unused pension funds becoming subject to inheritance tax, so taking the money sooner can look like an obvious solution.

Obvious solutions have an unfortunate habit of becoming complicated once tax, investment returns and life expectancy get involved.

A larger withdrawal might reduce a possible inheritance tax liability later, but it can also create an immediate income tax bill, shorten the life of the pension pot and move more money into the client’s estate. Tax planning occasionally amounts to little more than choosing where you would prefer the problem to sit.

Investment conditions add another layer. Nine in 10 advisers said they were concerned about volatility drag, where withdrawals during unsettled markets erode the value of a portfolio more quickly. Another 88 per cent highlighted sequencing risk: poor returns early in retirement can make later withdrawals much harder to sustain.

These aren’t reasons to leave every withdrawal strategy untouched. Some clients may have perfectly sound reasons for taking more from their pensions. But a tax-led increase needs to be tested against the whole retirement plan rather than treated as a quick escape route from a future liability.

That means revisiting cashflow modelling, checking the tax position and examining what happens if investment returns disappoint early on. Advisers will also need a clear record of why the client wants the money and whether alternative options have been considered.

There is a commercial concern too. More than nine in 10 advisers fear that increased market volatility during accelerated drawdown could affect their firms and put recurring income at risk. It is understandable, although the client’s retirement security must remain the starting point.

The immediate challenge is keeping a worried client focused on consequences that may not appear for years. Someone anxious about inheritance tax probably isn’t looking forward to a careful discussion about sequencing risk. Unfortunately, that is precisely the discussion they need.

It also creates more work. Withdrawal rates must be reviewed, different market scenarios modelled and any revised recommendation documented properly.

If that extra modelling and suitability work starts eating into your week, our paraplanners can handle the calculations and help turn the revised strategy into a robust suitability report. That leaves you free to deal with the more difficult part: explaining why acting quickly isn’t always the same as acting sensibly.

Tax anxiety moves fast. A pension pot emptied too enthusiastically can move even faster.