Majority of workers unaware of pension inheritance tax changes, research finds

Barnett 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.