Pip is just a boy when a convict rises out of the Kent marshes, turns him upside down to shake out his pockets, and demands food and a file to cut through his leg-iron. Pip, terrified, obliges. He creeps back before dawn with a pork pie and some brandy stolen from his sister’s pantry and hands them over in the fog. The convict is recaptured soon after, shipped off, and as far as Pip is concerned that is the end of the matter.
Years later a London lawyer arrives with news. Pip has come into money. A great deal of it, from a benefactor who wishes to stay anonymous and who intends to make him a gentleman.
Pip draws the obvious conclusion. It must be Miss Havisham: the wealthy recluse up at the big house, still in the wedding dress she was jilted in, every clock stopped at twenty to nine. She’s had him visiting for years. She has a beautiful ward, Estella, whom Pip loves. Plainly the old woman is grooming him for consequence and a good marriage. Obviously.
It is not Miss Havisham.
It is Abel Magwitch. The convict. The one from the marshes, who made a fortune farming sheep in New South Wales and spent it turning the boy who once brought him a pork pie into a gentleman. Every assumption Pip had built his adult life upon was wrong. The money was fact but the story he’d told himself about where it came from was fiction.
A century and a half on, a fair slice of the country is running a gentler version of the same script.
New research from Standard Life, the retirement people, found that nearly one in four Gen Z adults (born between 1997 and 2012) aren’t prioritising saving for their own retirement, because they expect to inherit money or property. One in five millennials say the same. A quarter of the under-thirties, give or take, are quietly banking on the Miss Havisham theory of personal finance.
Here’s the complication. The people whose money it is have other ideas.
The same research found one in seven parents now intend to prioritise enjoying their money and living for today, rather than leaving it behind. And that was before the tax change about to land.
From April 2027, most unused pension funds and pension death benefits will be counted within the value of your estate for inheritance tax. For years the pension was the one pot you could pass on largely beyond the reach of IHT, which made it a rather elegant thing to leave untouched and spend last. That logic is being turned on its head. When the rules change, the incentives change with them.
And people have noticed. Nearly three in ten parents told Standard Life the change will affect how they use their pension. One in ten now say they’re more likely to spend it during retirement rather than leave it behind. Another one in five say they’re more likely to give money away in their lifetime instead.
So the inheritance the younger generation is counting on is dissolving from two directions at once. Their parents increasingly want to spend it. And from 2027 the tax system increasingly rewards them for spending it, or for giving it away while they’re alive to enjoy the giving.
None of which makes an inheritance a bad thing to receive. It makes it a poor thing to plan around.
This is the ground a good number of our clients are standing on right now, from the other side of it. They’re the parents. They have the pension, the second property, the accumulated surplus, and a real question about how much to spend, how much to pass on, and when. April 2027 has turned that from a someday conversation into a now one. Lifetime gifting and its timing, the seven-year rule, what giving away too much does to your own security if you happen to live to ninety-five: all of it is suddenly live.
There’s no single right answer, because it turns on the numbers, the family, and how long everyone turns out to live. The direction of travel under current legislation is clear enough, though rules can shift again and individual circumstances differ enormously. What suits an estate of four million with grown, comfortable children is not what suits one of one and a half million with a grandchild who depends on it.
What’s harder to defend is doing what Pip did: rearranging a life around a version of events you’ve assembled yourself, and never once checking whether the person holding the money sees it the same way.
He found out at the worst possible moment. There’s usually a better one.
We help clients think these questions through from Hook, and across Hampshire, Surrey, Berkshire, Sussex and Kent.