A hardening inheritance tax context - with unused pensions set to become part of the potentially taxable estate from April 2027 - is changing the later life conversations advisers are having, according to a new report.
The research from Air, produced with Technical Connection and Ad Lucem, found that 'best practice' drawdown and intergenerational planning strategies are being re-thought, founded on an 'all asset' basis.
And for many families that all asset approach includes the family home as part of the balance sheet. Air says it should be treated as such and not 'ruled out' of consideration - especially where liquidity is limited.
The report highlights a clear behavioural signal: In 2024/25, FCA retirement income market data shows the overall value of money withdrawn from pension pots rose 36% year-on-year to £70.9bn, while tax-free cash withdrawn jumped 60.7% - a sign that many families are bringing liquidity decisions forward as they reassess how to fund retirement, gifting and legacy plans.
For some, releasing funds from their pension will enable them to plan for themselves and their family but for others this liquidity will not be enough for them to achieve their personal and intergenerational planning objectives.
The report also cites research showing that nearly half of under-35 homebuyers received financial help from family in 2024, with the average contribution around £27,500, supporting an estimated 335,000 family-assisted home purchases.
Against that backdrop, the report argues that it is becoming harder to run truly holistic planning conversations without acknowledging the scale of housing wealth. Equity Release Council market data estimates UK homeowner equity at £5.7tn, including £3.4tn held by over-55s.
The report stresses that bringing the home into the plan won’t be right for all clients – "but for more than a few it may be, provided it is founded on informed advice, clear adviser explanation and confirmed client understanding".
The researh backs a "Consumer Duty-aligned advice process" that keeps a clear set of alternatives on the table (cash, portfolio sales, pension withdrawals, downsizing, family loans, doing nothing), explains costs and trade-offs in plain English (including inheritance impacts), tests and records client understanding, and uses referral routes where appropriate as a controlled first step.
Tony Wickenden, founder and managing director of Technical Connection, said: “Clarity over 'the numbers' is absolutely essential before any decisions are made but it also has to be recognised that the role of financial planning is to help clients achieve what is important to them in life. Families don’t live on spreadsheets. Many clients want to support children and grandchildren at pivotal moments - but they’re understandably wary of dismantling portfolios or compromising their future financial security. The point isn’t to push a product; it’s to build a disciplined, repeatable way to weigh options, explain trade-offs and document understanding so decisions are genuinely informed…and which, when appropriate, incorporate at least a consideration of how the main residence and Later Life Lending could be used."
Will Hale, CEO of Air, commented: “With pensions set to fall into IHT from 6 April 2027, the old sequencing rules are being re-written and ‘which pot do we spend?’ has become one of the most consequential questions families will ask. This is a question advisers can’t afford to answer on autopilot. Our aim is to equip advisers with the insight, tools and support to bring the home into that conversation safely - whether that means establishing referral partnerships or building capability over time.”
