Ryan FowlerBarnett Waddingham, part of Howden, has found that 62% of UK workers are unaware that unused workplace pension savings will be included in their estate for inheritance tax purposes from April 2027.
The research, based on a survey of 2,000 employees with defined contribution pensions, highlights growing concern about the potential impact of the changes on retirement and estate planning.
Around 70% of respondents said they were concerned their family would receive less than intended, while 63% were worried their pension savings could increase the risk of inheritance tax being due.
Other concerns included the administrative burden on families, cited by 67%, and a lack of clarity around pension savings, with 58% saying they were unsure how much they held or where their pensions were.
Concern about pension visibility was particularly evident among those approaching retirement, with 37% of workers 3-4 years from retirement unsure of their pension position, rising to 55% among those with 5-10 years remaining.
Mark Futcher, head of DC pensions at Barnett Waddingham, said: “It’s clear that the upcoming changes are creating a split in behaviour.
“While our findings show many remain in the dark about what’s coming, recent headlines suggest those who are aware are hitting the panic button – pulling out lump sums to avoid future tax bills.”
He added: “This highlights the risk of making long-term financial decisions in the heat of the moment.
“Acting too quickly could store up problems for later, from reducing retirement income to creating additional tax liabilities.
“Employers and Workplace Pension Providers have a critical role to play here, and should be acting as a steady hand on the tiller when uncertainty like this arises.
“By engaging and offering targeted education, they can help employees navigate what’s ahead with confidence, rather than making decisions they may come to regret in years to come.”
