An Insight Into My Recent Work
On the back of last week’s note sharing an insight into my work, an article in Citywire this morning prompted today’s message to you.
The article reported that around £250m of tax free cash was withdrawn from pensions ahead of the Autumn Statement amid budget worries, underscoring that for many people the risk of future restriction was more than just speculation or something to worry about later.
This was precisely the scenario we were preparing for with a number of clients in the months leading up to that budget.
The discussion, planning considerations and available options were shared across our client base but were understandably mobilised primarily with those holding larger pension balances and in several cases, those already at or close to the £268,275 lump sum allowance.
It illustrates why careful, proactive planning and anticipating adverse outcomes rather than waiting for them is in my view a cornerstone of robust wealth management.
Below is a condensed breakdown of my logic and the outcomes of that planning.
1. Crystallising the 25% Tax-Free Cash — The First Win
We deliberately crystallised and extracted the available 25% tax free cash from a number of pension pots before the budget. The move was protective in nature not speculative and designed to lock in existing entitlements in case the government restricted or removed the tax free element.
This gave those clients full control of that tax free capital, unconditionally and without exposure to potential legislative uncertainty.
2. Recycling Into ISAs — The Second Win
Tax-free capital is a scarce resource and moving money from pensions into tax-free lump sums and then into ISAs is among the most efficient structural outcomes available.
This leap frogged reliance on annual ISA allowances (£20,000 each April) and gave clients a significant advance in building long term, tax free wealth.
3. No MPAA Triggered — The Third Win
Because no taxable pension income has been taken from drawdown in any of these cases the Money Purchase Annual Allowance (MPAA) has not been triggered.
This means those clients retain their full £60,000 annual pension allowance, which dovetails neatly with the monthly contributions many are still making, maximising tax relief and long term growth while keeping future options fully open.
4. Future Tax-Free Cash Remains Available — The Fourth Win
Crystallising pensions at that point hasn’t foreclosed future opportunity. Clients can still build further pension savings that generate additional tax free cash, subject to the prevailing lifetime cap.
Importantly, the 25% entitlement is calculated on the current uncrystallised value, not merely on new contributions and it’s a nuance that matters and is often misunderstood.
The Counter Arguments I Weighed
It’s also worth saying that I didn’t just do this blindly or without considering counter arguments. I spent ages thinking about it.
At the time one of the main objections I could see was that crystallising pensions early moved money out of what was historically an IHT efficient pot and into an estate that would fall into IHT later on.
That was very much at the front of my mind. But even then the direction of travel from government was clear and since then it has effectively become fact that pensions are being brought within the scope of IHT in one form or another.
I was also mindful of acting ahead of legislation, market timing and the risk of doing something only for nothing to change. They were all valid considerations and they genuinely kept me awake at night.
But equally, once entitlements are removed we don’t get a second chance to lock them in and in situations where clients were already at or near that lump sum allowance the risk of waiting outweighed the risk of acting in my view.
Why Networks Default to “Wait and See”
Some larger firms and adviser networks are understandably optimised for absolute pin point compliance consistency across hundreds and in one case literally thousands of advisers, which I think leads to a “wait and see” default.
My view has always been that a good adviser puts the client first, weighs risks up properly, and takes them on what he or she believes is, on balance, the best path.
The point I’d underline here, and beyond the mechanics, is that good planning is anticipatory, not reactive.
Waiting until things have happened often means planning around outcomes rather than preparing for them. Protecting outcomes before adverse possibilities crystallise is exactly what sensible, risk aware wealth planning and management looks like.
If you’d like to talk through this in your own context, I’m happy to have a conversation.
In fact, I’ve a number of planning strategies that are worth their weight in gold and one in particular that I believe is a no brainer for those with IHT concerns.
Anyway, make of it all what you will and like I say, I’m always happy to have a pre engagement chat.
Originally Penned on 22 January 2026
