Many savers plan to pass pension pots to loved ones but are unaware of pending inheritance tax rules on retirement funds, new research reveals.

Half of over-45s with a household income of £50,000 and upwards are in the dark about the pending changes, and 85 per cent say they don't understand how inheritance tax will affect their families.

Many people may be planning for retirement based on outdated assumptions around government policy, including inheritance tax but also a rising state pension age, according to Schroders Personal Wealth.

The Government announced in last Autumn's Budget that it will make pensions liable for inheritance tax like other assets such as property, savings and investments starting from April 2027.

The basic threshold for inheritance tax – known as the nil-rate band – is £325,000, or if you are leaving a family home to direct descendants it’s £500,000 – double those figures if you are a couple.

IHT is charged at 40 per cent on assets above those thresholds, but spouses are exempt until the second partner dies.

Meanwhile, the age you can start drawing the state pension - worth £12,000 a year if you qualify for the full amount - is due to rise from from 66 to 67 between 2026 and 2028. 

In April 2028, the minimum age for accessing workplace and other private retirement pensions will also go up, from 55 to 57.

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Schroders Personal Wealth, which surveyed 1,500 people across the country, found:

- One in four over-45s with a household income of £50,000-plus plan to pass on unspent pensions to their family when they die, but the overwhelming majority admit they don't fully understand IHT rules;

- When it comes to financial plans, 43 per cent don’t have an up-to-date one and 26 per cent don't have one at all;

- On the value of their pensions, 22 per cent have no idea what they are worth, and that rises to 28 per cent among those aged 65 and over;

- Some 60 per cent of those polled had not taken financial advice about retirement.

- One in 10 feel 'extremely confident' about their financial future in retirement, but nearly a third rated their confidence at between 0 and 4 out of 10.

Alex Gaita, financial planning director at Schroders Personal Wealth, says: 'Retirement planning doesn’t happen in isolation – it’s shaped as much by shifting laws and government decisions as by personal goals.

'Yet over half of people are unaware of upcoming changes. With tax rules likely to evolve and fresh uncertainty around the upcoming Budget, too many are planning for the future based on assumptions, not facts – a risky disconnect.'

He offers the following tips on staying on top of pension changes.

1. Remain up to date through trusted resources: Bookmark the government-funded website MoneyHelper.org, which offers clear, impartial guidance on pensions, tax, and financial planning.

2. Build flexibility into your financial planning: Even if some of the changes feel a long way off, it’s important to take into account both short-term needs and long-term goals. Avoid making any immediate knee-jerk reactions that may be tricky to reverse.

3. Start conversations early: Money remains one of the last family taboos, but open discussion is one of the most powerful tools families have.

Talking about inheritance, later-life care, and where key documents are stored not only provides peace of mind, but also helps build financial literacy for the next generation.

4. Get financial advice: Our advisers use cash flow modelling, which can help you visualise your income, expenses, and goals over time to help you make informed decisions. Check in with your financial adviser when new policy changes are announced.