What else is happening whilst everyone is worrying about inheritance tax on pensions?

What else is happening whilst everyone is worrying about inheritance tax on pensions?Written on November 14, 2025 by Michael Powell

Key Points

From April 2027, unused pension funds will be included in your estate for IHT purposes under the Finance Bill 2025–26.
The Pensions Bill 2026 introduces measures intended to improve outcomes for savers, including DC scheme consolidation and small-pot mergers.
A new Value for Money framework aims to assess schemes on overall value, not cost alone.
Default retirement pathways and wider use of Collective DC schemes may change how people access pension income.
DB schemes may see more flexibility through superfund transfers and new rules on how surpluses can be used.

Unused pension money will count towards your estate for IHT purposes under the Finance Bill 2025–26. Effective April 2027. Effective April 2027. This measure reinstates a tax on pensions after death which was abolished in 2015. However, there are some positive changes you may not have heard about.

The Pensions Bill 2026: What it means for working age adults

The upcoming Pensions Bill 2026 introduces significant changes designed to improve outcomes for pension savers.

Defined Contribution (DC) Schemes

Scheme Consolidation: Smaller DC schemes will merge into larger “megafunds” to improve efficiency. Multi-employer schemes must reach £25 billion in assets by 2030.
Small Pot Consolidation: Pension pots worth £1,000 or less will be automatically combined into authorised consolidator schemes, reducing fragmentation.
Value for Money Framework: A new statutory system will assess schemes on overall value, not just cost, ensuring better returns for members.
Default Retirement Pathways: If you don’t make an active choice at retirement, schemes will offer a default solution and guidance to help you understand your options.
Collective DC Schemes: Multi-employer CDC schemes will be permitted.

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Defined Benefit (DB) Schemes (Final Salary)

Superfunds: A new regulatory framework will allow DB schemes to transfer liabilities to authorised superfunds.
Surplus Flexibility: Easier rules for using DB surpluses, including funding DC contributions.

What does this mean for you?

These changes may:

Simplify pensions by consolidating multiple small fund values automatically
Aim to help you plan your own outcomes
Increase choice for employers when choosing a suitable scheme
May mean CDC becomes the preferred type of scheme in the future
Possibly higher pension incomes for savers in CDC than DC schemes

Get in touch with Kirk Rice for financial advice

If you have questions about how to plan for your own retirement or passing on wealth, please get in touch. Email us at info@kirkrice.co.uk

Please note: This article is correct as at the publication date. The answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The information is based on current tax legislation which may change in future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of relief from taxation are subject to change. The Financial Conduct Authority does not regulate tax planning.

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