MAKING PENSION PLANNING AND ESTATE PLANNING MORE EFFICIENT IN THE UK

Planning for your future is one of the most important, and too often overlooked, aspects of financial wellbeing. 

Whether you’re focused on enjoying a comfortable retirement, leaving a legacy for your loved ones, or reducing the tax your family might pay on inheritance, pension and estate planning go hand in hand.

At Sadler Advisory, we help individuals and families across the UK make smarter, more efficient financial decisions. This article covers some key principles, common mistakes to avoid, and ways to make your planning more tax-efficient. 

If you’re ready for clear, expert advice on your pension, we’d love to talk to you.

WHY PENSION AND ESTATE PLANNING ARE IMPORTANT

Your pension is your primary tool for funding retirement, while your estate plan determines what happens to your wealth when you pass away. Both are essential for protecting your family’s financial security and ensuring your wishes are followed.

Many people think estate planning is only for the very wealthy, but that’s far from the truth. Even if you have a modest pension pot or just a family home, careful planning can make a significant difference to:

• The amount of tax you or your loved ones pay

• How smoothly your wealth is passed on

• The peace of mind that comes from knowing everything is organised
  

Taking action early gives you more options and can save your family from complex or expensive legal and tax issues later on.

KEY STRATEGIES FOR MAKING PENSION AND ESTATE PLANNING MORE EFFICIENT

Here are some of the most effective ways to make sure your retirement and legacy planning work as hard as possible for you.

✔ Review your pension regularly

It’s easy to lose track of old pensions, especially if you’ve moved jobs several times. A regular review helps you:

• Understand how much you’re on track to receive in retirement

• Identify opportunities to consolidate smaller pots into a single scheme (though check for valuable guarantees before transferring)

• Adjust your investment choices if they’re no longer suitable
  

A good starting point is the Aviva retirement calculator, even if your pension is not with them, it provides a good breakdown of the potential amounts and options at pension age.   But for a full review, professional advice is key -  especially if you have multiple pots or defined benefit schemes.

✔  Use tax allowances wisely

Making the most of available allowances is one of the simplest ways to improve efficiency:

• Contribute up to your annual allowance each year (currently £60,000 for most people, but check if tapering applies, typically for higher income-earners).

• Take advantage of tax relief on pension contributions - higher and additional rate taxpayers get extra relief through self assessment.

• Understand the lifetime allowance rules, which have been changing in recent years. Without advice, it’s easy to unintentionally create a large tax bill.
  

✔ Plan asset transfers between spouses or civil partners

Transferring assets between married or civil partners (but not unmarried spouses) is usually free of Capital Gains Tax (CGT), making it a powerful tool for tax efficiency. For example:

• Transferring assets to a lower-earning spouse can reduce income tax.

• You can transfer assets to use both partners’ capital gains tax (CGT) annual allowances (which are like tax-exempt income each year).

• Equalising pension savings can help make the most of both partners’ annual allowances.
  

This type of planning needs to be carefully timed and structured, but it can save thousands over time.

✔ Write or update your will

Without a valid will, your estate will be distributed under intestacy rules,  and that may not align with your wishes. Writing (or updating) your will ensures:

• Your chosen beneficiaries inherit as you intend

• Guardians for children are formally appointed

• Your estate is administered efficiently, reducing stress for loved ones
  

It’s worth reviewing your will every few years or after major life changes, such as marriage, divorce, or having children.

✔ Nominate pension beneficiaries

Many people don’t realise that pensions usually sit outside your estate for inheritance tax purposes. That’s good news for tax efficiency,  but it also means they won’t automatically follow the instructions in your will.

Make sure you’ve nominated beneficiaries with each pension provider. This simple step ensures your pension savings are passed on according to your wishes and could help reduce inheritance tax (IHT).

THINGS YOU NEED TO AVOID

Just as important as knowing what to do is knowing what not to do. Here are three common mistakes:

❌ Ignoring pension consolidation

Having multiple small pension pots can be inefficient and harder to manage. But don’t rush to consolidate, some older schemes include valuable guarantees, such as higher annuity rates, that you could lose.

❌ Forgetting inheritance tax (IHT)

Even if you’re not “wealthy”, IHT can still bite,  particularly if you own property. Gifts, trusts, and pension death benefits all have tax implications, so careful planning is essential.

❌ Doing it all yourself when things get complicated

Blended families, business ownership, overseas property, or significant investments all need tailored advice. DIY planning might seem cheaper, but mistakes can be very expensive to fix later.

HOW SADLER ADVISORY CAN MAKE PENSION AND ESTATE PLANNING EASY FOR YOU

At Sadler Advisory, we work as your trusted partner,  or alongside your existing advisers,  to make your pension and estate planning as efficient as possible.

We can help you:

• Optimise pension contributions, withdrawals, and consolidation decisions

• Review and support estate planning, including wills and trusts

• Manage inheritance tax (IHT) planning and gifting strategies

• Plan for business succession, if relevant

• Provide family wealth advice, so your loved ones are supported for the future

READY TO PLAN FOR THE FUTURE?

The benefits of efficient pension and estate planning go beyond saving tax, they give you and your family peace of mind. Whether you’re starting from scratch or need a second opinion on existing arrangements, professional advice can make all the difference.

If you’d like to discuss your options in confidence, get in touch with us today.