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More than half of UK adults are unaware of pension policy changes that could have a significant impact on their retirement plans, according to research. 

A survey of 1,500 British people by Schroders Personal Wealth found that 51 per cent were “not aware at all” of upcoming changes, such as the increase in the state pension age next year, the inclusion of pensions within inherited estates from 2027 and the rise in the age allowing access to a tax-free lump sum from 2028.

Alex Gaita, director of financial planning at SPW, said these changes were not just technical but “deeply personal . . . they affect when people can stop working, how much they can afford to spend, and what they can leave behind”.

The UK’s state pension age for both men and women is 66, but it will rise to 67 between 2026 and 2028. Between 2044 and 2046, it will rise to 68. 

The full rate of the UK’s state pension is £230.25 per week, or £11,973 a year. Under a policy known as the “triple lock”, which Labour has committed to for the rest of this parliament, it rises by consumer inflation, average wage growth or 2.5 per cent, whichever is highest. 

The government is reviewing the state pension age, a process that must be carried out every six years.

“The state pension is a particular blind spot, since it’s rather complicated, and people simply don’t believe they need to even consider it until much older,” said Rob Morgan, chief analyst at Charles Stanley, an investment manager.

He added that in a survey last year conducted by Charles Stanley, on average, people thought that 24 years of contributions or credits were needed to qualify for a full state pension, when they need 35. 

Just 15 per cent of people surveyed by SPW said they “fully understood” the tax rules around passing on pensions to beneficiaries when they die, and have planned their finances accordingly. That is despite 29 per cent saying they planned to pass part or all of their pensions to family members or heirs.

Last autumn, chancellor Rachel Reeves announced that pensions would be subject to inheritance tax by April 2027, upending financial plans, as retirement funds will no longer be a tax-efficient form of succession planning.

UK inheritance tax is applied at a rate of 40 per cent to assets above £325,000, but this can rise to £500,000 if a property is also passed on. Pensions will still pass to spouses and civil partners without incurring inheritance tax.

Beneficiaries may also have to pay income tax on pension proceeds after inheritance tax has been deducted, if the pensioner dies after they turn 75, which could give rise to an effective tax rate of 67 per cent for additional-rate taxpayers. 

Sir Steve Webb, partner at consultancy LCP and former Liberal Democrat pensions minister, said the increase in the age at which you can access workplace or personal pensions without a tax penalty from 55 to 57 — effective from April 6 2028 — was a “real cliff edge” for financial planning. 

“There is no doubt that there are some changes to the pensions landscape where final decisions have been taken, which have a direct effect on consumers, and where public awareness is still at a low level,” he said.