Reeves Plans Pension Inheritance Tax Reforms, Launches State Pension Age Review

Chancellor Rachel Reeves is advancing plans to include unused pension funds in inheritance tax (IHT) calculations from 2027, aiming to remove tax distortions and inconsistencies in pension treatment, despite strong criticism from financial experts who warn the changes could create confusion and additional burdens for bereaved families. The Government also launched an early review of the state pension age, currently set to rise from 66 to 67 by 2028, with consideration for further increases due to rising life expectancy and sustainability concerns. Reeves emphasized the need to ensure the pension system remains affordable for future generations and commissioned expert analysis on pension adequacy and age. Critics caution that increasing the pension age may exacerbate poverty among older adults and that many may struggle to work into their late 60s given health challenges. There are projections that the pension age could rise to 68 or beyond by the mid-21st century, sparking debate about the fairness and timing of such reforms. The government is legally required to conduct periodic reviews of pension age, and this latest review could accelerate planned increases in retirement age amid demographic and fiscal pressures.