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This article is for general guidance only and is not financial or professional advice. Any links are for your own information, and do not constitute any form of recommendation by Saga. You should not solely rely on this information to make any decisions, and consider seeking independent professional advice. All figures and information in this article are correct at the time of publishing, but laws, entitlements, tax treatments and allowances may change in the future.
Saga celebrates its 75th anniversary in 2026. To mark this special occasion, the company unveiled the ‘Saga Rose’ at the RHS Chelsea Flower Show earlier this year.
But this is not just a time for back-slapping alone. That’s because, when it comes to financial planning, turning 75 is also an important consideration – especially when it comes to pensions.
Here’s why this milestone is so important and the steps you can take to prepare for its arrival.
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Some Saga Money readers may remember the pension lifetime allowance. This was the total value that you could save across all your pension arrangements without having to pay an extra tax charge.
The allowance was abolished in 2024; the decision generally being regarded as good news for people who had built up larger pension pots. However, the move also resulted in the creation of a retirement myth, namely, that the age of 75 was less important than it had previously been in the world of pensions.
It’s true that there is no longer a lifetime allowance test at age 75 to be concerned about. But the age remains significant. This is because HMRC still uses this milestone to draw a line under certain tax advantages that relate to pensions.
If you’re approaching your 75th birthday and still looking to grow your pension pot, it’s worth making any large pension contributions now. That’s because, once you turn 75, you will no longer receive tax relief on any personal pension contributions you make.
This is important, because tax relief boosts the contribution you make into a pension.
Lucie Spencer, financial planning partner at wealth manager Evelyn Partners, says: “In the UK, pension contributions benefit from tax relief up to the higher of your relevant earnings or £60,000. Or £3,600 if you have no earnings, for example, if your income is derived solely from investments such as property.
“However, once you reach the age of 75, while it is still possible to contribute to a pension, subject to scheme rules, you will no longer receive tax relief on those contributions.”
After age 75, if you still have money to save, an Individual Savings Account, or ISA , can be a useful alternative to a pension. Any growth and withdrawals are tax-free, and there is no upper age limit on opening or paying into one.
The annual ISA allowance is currently £20,000, but the rules change on these products from April 2027. This means that that the over-65s will still be able to use their full allocation for cash-based ISAs. But the under-65s will be limited to a £12,000 ceiling, with the balance ear-marked for stock market-based ISAs should they so desire.
Note that if you are continuing to work through a limited company, pension contributions made by your company can usually still qualify for corporation tax relief.
Currently, pensions fall outside your estate for inheritance tax (IHT) purposes, which makes them an effective estate planning tool.
If you die before the age of 75, your beneficiaries can also usually draw income from the pension without paying income tax. If you die after turning 75, your beneficiaries must pay income tax at their normal rate.
However, these rules will change from April 2027, when unused pension funds will be included in the value of your estate and brought into IHT calculations.
Lucie Spencer says: “Where death occurs before the age of 75, pension funds passed on to beneficiaries can still be withdrawn free of income tax, up to an individual’s lump sum death benefit allowance [currently standing at £1,073,100].
“For individuals who die after the age 75 post-April 2027, their funds will be liable to both inheritance tax at 40% and income tax at the beneficiary’s marginal rate, creating a potentially significant tax charge.”
Keep in mind, however, that whether your beneficiaries will face an IHT bill will depend on the value of your estate and any available exemptions and reliefs.
Craig Rickman, pensions expert at interactive investor, explains: “Spouses and civil partners can still inherit the pension IHT-free. For everyone else, IHT will only be due if the value of pension plus the rest of your estate exceeds your available IHT allowances - potentially up to £1 million for married couples who own a home that’s left to direct descendants like children and grandchildren.”
Most people can take up to 25% of their pension pot as a tax-free cash lump sum. But, when to take it is one of the most important financial decisions faced by retirees.
Maike Currie, vice president of personal finance at PensionBee, says: “Whether you use it to build a cash reserve, support family, strengthen inheritance tax planning or simply create greater financial flexibility, the decision should form part of a broader retirement plan rather than being driven by tax alone.”
That said, timing does matter. While you don’t lose the right to take tax-free cash after the age of 75, some older pension plans may restrict when withdrawals can be made, so it’s essential to check.
There are other considerations too, as Currie explains: “If you die after 75 with tax-free cash still inside your pension, your beneficiaries lose the income tax advantages that can apply before that age.”
This makes it important to think ahead about when and how to use tax-free cash, rather than leaving these decisions until later life.
Rickman says: “You don’t have to draw the lot in one hit, and one approach is to stage withdrawals as part of a broader income tax planning strategy while allowing any remaining funds to stay invested.”
You could also consider gifting withdrawn funds under inheritance tax allowances, but this needs carefully planning to ensure it doesn’t impact your own retirement income.
Turning 75 doesn’t directly affect your pension beneficiary nominations, but this can be a good time to review them. Unlike your will, your pension is usually paid out according to an “expression of wish” form held by your provider.
However, it’s worth checking that it’s up to date and still reflects your wishes, particularly if this was completed some time ago.
This is also a good opportunity to review your overall financial arrangements, especially if these have legal or financial consequences for loved ones. This can include updating your will, ensuring you have a lasting power of attorney in place, and making sure you have planned for potential care costs.
Spencer says: “Given the evolving tax landscape, particularly with pensions becoming subject to IHT from April 2027, a holistic review of finances at or before the age of 75 can play a crucial role in preserving wealth for future generations.”
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