Gary Smith, financial planning partner and pensions expert at Evelyn Partners, claims recent changes to the way pensions interact with inheritance tax could lead to increased spending among savers and an increase in the popularity of annuities.

He also said IHT changes could lead to more older people marrying because wealth left to a spouse or civil partner is tax-free and this will also apply to pensions.

In the first budget presented by the Chancellor in October, it was announced that defined contribution pension pots would be included in the IHT obligations of estates from April 2027.

The Office for Budget Responsibility estimates that an extra 1.5 per cent of total deaths in the UK will become liable to pay IHT as a result; This equates to 10,500 of the approximately 213,000 properties with inherited retirement wealth available between 2027 and 2028.

In addition, 38,500 properties will pay an average of £34,000 in additional IHT due to pension assets being included in the value of the property.