Rethinking Pensions in a Changing Landscape

“When we think of wealth purposefully, our decisions change.”
— Jonathan Gibson, Purposeful Wealth

Pensions are often viewed as just one piece of the wealth management puzzle. But with the right planning, they can become a powerful tool—not only for retirement income, but also for tax efficiency, intergenerational wealth transfer, and long-term investment growth. Most importantly, pensions can be aligned with what truly matters in life.

At Wells Gibson, we believe wealth should serve you, not the other way around. That means looking beyond the numbers to ensure your pension strategy is consistent with your values, legacy intentions, and life goals.

The Evolving Pension Landscape in the UK

UK pension rules have undergone significant changes in recent years. Most notably, the Lifetime Allowance (LTA) was officially abolished in April 2024, removing the tax penalty on pension savings above the previous £1,073,100 threshold. This change has opened up new planning opportunities—particularly for those rebuilding pension wealth after breaching prior thresholds.

However, the system remains complex, especially around Annual Allowance limits, carry forward rules, and drawdown tax planning. These intricacies require thoughtful consideration and, in many cases, tailored advice.

Key Pension Planning Stats (UK, 2024)

• £60,000 – The standard Annual Allowance for pension contributions (2024–25), tapering down to £10,000 for those with income over £260,000.[1]
• £1.4 million – The average pension pot size among the top 1% of UK wealth holders (ONS).[2]
• £200bn+ – Total assets now held in Self-Invested Personal Pensions (SIPPs).[3]
• 45% – The highest marginal income tax rate—making pension contributions a highly tax-efficient vehicle for many.[4]

Why UK Pensions Still Matter

Despite the appeal of ISAs, investment accounts, and property portfolios, pensions remain unique in their combination of benefits:

• Upfront tax relief at your marginal income tax rate (20%, 40%, or 45%).
• Inheritance tax advantages—defined contribution pensions can typically be passed on IHT-free if death occurs before age 75.
• Tax-free growth on investments within the pension wrapper.

Purpose Over Products

In Purposeful Wealth, Jonathan Gibson writes:

“Purpose provides direction. Without it, wealth can feel like an endless pursuit of more.”

When applied to pensions, this perspective invites us to ask deeper questions:

• How can my pension strategy reflect the legacy I wish to leave?
• Am I aligning my retirement plans with how I want to live now and in the future?

This is about more than compliance or optimisation—it’s about clarity and intentionality.

Common Gaps in Pension Planning

Even for affluent families, the following planning gaps are surprisingly common:

1. Underuse of Carry Forward – Unused allowances from the previous 3 years can allow up to £180,000 in contributions in a single tax year.
2. Overpaying Tax in Drawdown – Uncoordinated withdrawals can result in unnecessarily high income tax bills.
3. Missing Family Strategies – Contributions to a spouse’s or child’s pension can support long-term family wealth goals.
4. Overlooking Employer Contributions – Company directors can make tax-deductible employer pension contributions, reducing corporate tax and avoiding NICs.

Strategic Tips for a Purposeful Pension Plan

• Use Self-Invested Personal Pensions (SIPPs) or Small Self-Administered Schemes (SSAS) – These offer greater flexibility and access to a wider range of assets including commercial property and private investments.
• Delay Access for IHT Benefits – Pensions are not part of your estate for inheritance tax purposes; using other assets first can preserve this benefit.
• Integrate Cashflow Planning – A personalised lifetime wealth forecast can help balance pension withdrawals, ISAs, and other assets to meet your lifestyle needs.
• Manage Tapered Annual Allowance Exposure – High earners may need to explore salary exchange, charitable giving, or pension timing to retain allowance access.

Wealth Aligned with What Truly Matters

With the abolition of the Lifetime Allowance, pensions are once again front and centre in strategic planning conversations. But numbers alone don’t create confidence.

As Jonathan Gibson notes:

“True wealth is measured not just in pounds and pence, but in peace of mind, freedom, and purpose.”

At Wells Gibson, we help clients use their pensions not just to plan for retirement, but to live more intentionally. Whether you’re selling a business, stewarding family assets, or shaping your legacy, your pension could be one of your most powerful, and underused, assets.

This Is Your Time to Help Others Feel Secure Too

Amid the current market turbulence, it’s always encouraging to hear that your partnership with Wells Gibson leaves you feeling confident and secure. We’re grateful to walk alongside you, helping ensure your financial decisions reflect not just your goals, but your values.

As we navigate these uncertain times, I’d like to extend a personal invitation. If you have friends, family members, or colleagues who feel unsure about their financial future—or who may not be receiving the clarity and guidance they deserve — I’d be honoured to meet with them.

Our purpose is to provide thoughtful, values-based advice that brings peace of mind, just as you’ve experienced.

After all, purposeful wealth isn’t just about what you have. It’s about what you do with it—and who you walk with along the way.