More than a third (36%) of private pension holders are more likely to leave an inheritance or larger amount to their children following the introduction of new rules on pension assets.

The rules, introduced by the Chancellor, enable unused pension assets to be passed on to beneficiaries free of inheritance tax.

According to the study by Investec Wealth & Investment, one in five (19%) pension savers say they will boost the amount they are putting into their pension pots to capitalise on the fact that they can pass on these assets free of inheritance tax under 75.

One in eight (13%) plan to transfer existing savings and investments such as ISAs and unit trusts into their pension.

Nick Gartland, senior financial planning director, Investec Wealth & Investment, said: "This research underlines how the new pension freedom rules are already having a profound impact on the way the affluent retired fund their later years.

Many of those who are fortunate to have built up a portfolio of savings and investments are turning to these ahead of their pension so the value of the latter can be preserved for the next generation."

IW&I's research also shows that the new rules will to lead to changes in the way that many pensioners fund their retirement.

A fifth (21%) of respondents are planning to increase their reliance on a greater proportion of their non-pension assets such as ISAs for income to maintain the size of their pension pot.

Of those planning to spend more of their non-pension assets, the majority (76%) said they would turn to their ISAs for retirement income, 43% to savings accounts and a similar number (39%) to stocks and shares.

Nearly a quarter (23%) said they would downsize property to free up equity from their home to preserve their pension pot for the next generation.

First published 02.07.2015

Lindsay.sharman@wilmingtonplc.com