Planning for the Future: What Pension Changes Could Mean for You
With proposed inheritance tax changes on the horizon, now may be a timely opportunity to review your plans and ensure your assets support what matters most.
We understand that many of our supporters may be thinking carefully about retirement, pensions, and providing for loved ones.
In the UK Government’s Autumn 2025 Budget, it was proposed that from April 2027 unused pension funds and death benefits will be included in a person’s estate for inheritance tax (IHT) purposes. This means more estates could become subject to IHT.
Whilst changes like this can feel uncertain, they also create an opportunity for thoughtful planning and for ensuring your money goes to the people and causes you care most about.
Charitable legacy giving can offer a helpful way to reduce an IHT bill whilst directing your money to causes that matter to you.
At present, charity tax relief allows the IHT rate to be reduced from 40% to 36% when more than 10% of an estate is left to charity. If pensions are to be included in estates, as the Government proposes, it will be important for supporters who plan to leave a fixed sum to charity to review their arrangements.
It’s also useful to be aware that pensions are often treated differently from other assets and are usually distributed outside of a will, with rules varying between pension schemes. Beneficiary nominations or expression of wishes forms are not automatically updated when your will changes, so it is important to review them regularly to ensure they still reflect your wishes. If you have named a charity as a beneficiary of your pension, letting the organisation know can also help ensure your wishes are understood and recorded.
It is a common misconception that once a will has been written, it will remain suitable for a lifetime. We encourage our supporters to review their will at least every five years, and particularly after major life events such as marriage, divorce, or having children. It can also be helpful to reflect on your plans following changes in government policy that may reshape savings and taxation.
We would always recommend speaking with a qualified financial adviser to understand how any changes in government policy may affect your individual circumstances.
Charitable gifts can form part of a balanced estate plan. Looking beyond potential tax benefits, leaving a gift to charity allows you to create a lasting legacy beyond your lifetime. Many generous supporters have already chosen to pledge a gift to Birmingham, helping to provide educational opportunities for future generations of talented students and to fund research with the potential to improve and save lives around the world. Earlier this year, we shared an article reflecting on legacy giving in 2025, expressing our sincere thanks to those who chose to support a cause that mattered deeply to them.
To discuss leaving a gift in your will, email legacies@bham.ac.uk or call +44 (0)121 414 9161 for a confidential, no-obligation conversation. You can also request a free legacy brochure via our website. If you have already pledged a gift to Birmingham, we'd love to hear from you and welcome you to the Rowbotham Fellowship.
We want our supporters to look ahead with confidence and to view estate planning as a way of achieving peace of mind and clarity. Whilst everyone’s circumstances are different, making informed decisions about where your money will one day go can be reassuring. For some, that reflection includes considering a charitable legacy, a simple way to create lasting impact whilst still providing for those closest to you.