Britons saving towards their pension have been warned against making a "costly and irreversible mistake" that could see tens of thousands of pounds lost.
Changes coming into force next April will see pensions fall within inheritance tax rules for the first time. Unused private pension pots can currently be passed on tax-free, but under measures announced by former Chancellor Rachel Reeves in 2024, this will end in spring 2027.
More beneficiaries drawn into 40% death tax
More beneficiaries are expected to be drawn into paying the 40% death tax once the value of remaining retirement savings is included.
Some savers are preparing for the new rules by merging old workplace pensions into a single pot, but experts have warned that there are "compelling reasons" to avoid such a move.
Experts warn against merging pension pots
Alasdair Walker, of wealth planners Optimum Path, told GB News: "You could be paying higher fees for 20 years or more. Some people could give up products with guaranteed annuity rates, potentially leaving them with less in retirement."
"These irreversible choices could potentially cost tens of thousands of pounds throughout retirement."
Andrew King, of Evelyn Partners, added: "Consolidation could mean [losing] out on beneficial features like a protected lower retirement age, enhanced tax-free cash and beneficial features like guaranteed annuity and growth rates."
Delays and admin risks for families
Becky O'Connor, of Pension Bee, also warned that an influx of consolidation requests could overwhelm providers, causing long delays.
"Someone could have their financial affairs in perfect order, only to find their pension is stuck in transit when the rules change," she said.
Maike Currie, vice president of personal finance at Pension Bee, also warned that an "admin nightmare" could be "waiting in the wings for grieving families".
She told the Press Association: "One simple but important thing people can do now is ensure their expression of wish forms detailing their beneficiaries are up to date with all pension providers."
"Clear beneficiary information and accurate records could significantly reduce delays, confusion and stress for loved ones later on."
