Two in three pension savers (62%) are unaware that unused savings held in their pensions will be included in their estate for inheritance tax purposes from April 2027, according to a new report.
Those approaching retirement were more concerned about locating lost pension savings, according to the survey of 2,000 UK employees with a workplace pension by Barnett Waddingham.
For those with just 3-4 years until retirement, 37% were concerned about not knowing how much was in their pensions/where their pensions were, rising to 55% of those with 5-10 years left until retirement.
The Government announced several recent changes to IHT rules in last year’s Budget, including IHT being set to apply to unused pensions from April 2027 and extending the freeze to the Nil Rate Band and Residence Nil Rate Band to April 2031.
The Finance Act 2006 received Royal Assent on 18 March, including the legislation needed to include pensions within IHT for deaths on or after 6 April 2027.
Using IHT allowances to transfer wealth has been popular since the introduction of the Pension Freedoms in 2015.
How concerned, if at all, are you about the following potential issues related to your pension and inheritance planning?
| Concerned (Net) | Not concerned (Net) |
My family receiving less than I intend to leave them | 70% | 14% |
The administrative burden placed on my family when dealing with my pension | 67% | 16% |
My pension savings increasing the risk of inheritance tax being due | 63% | 17% |
My family not being able to afford professional help to navigate pension paperwork | 59% | 21% |
Not knowing how much is in my pensions/ where my pensions are | 58% | 25% |
My family having to deal with multiple pension providers after my death | 55% | 28% |
Source: Barnett Waddingham, 22 April
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.”
Separate research from Canada Life has found that the rules around gifting and IHT are also misunderstood.
HMRC collected £8.5bn in the 2025/26 tax year, a rise of £0.2bn year-on-year.