A recent study has revealed a serious lack of awareness among British citizens regarding upcoming pension reforms. More than half of UK adults are completely unaware of these new rules, which could significantly impact their retirement plans, savings, and the assets they leave behind.
Survey and Findings
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Conducted by Schroders Personal Wealth (SPW), the survey included 1,500 participants.
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51% of respondents admitted they were “not at all aware” of the key reforms.
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These reforms include:
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Increases to the State Pension Age.
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New inheritance tax rules on pensions.
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Changes to the age at which tax-free withdrawals can be made.
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The Changing Pension Landscape
According to Alex Gata, Financial Planning Director at SPW, these reforms are more than just government formalities—they are “deeply personal.” They determine when individuals can retire, how much money they will have, and what they can pass on to their loved ones.
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Current State Pension Age: 66 for both men and women.
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Future Increases:
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Rising to 67 between 2026–2028.
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Rising to 68 between 2044–2046.
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Pension age is reviewed every six years.
Rob Morgan, Chief Analyst at Charles Stanley, highlights a major misconception:
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Many people wrongly believe 24 years of contributions are enough for a full pension.
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In reality, 35 years of National Insurance contributions are required.
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The full state pension currently stands at £230.25 per week (£11,973 per year).
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It is protected by the triple lock, which ensures annual increases by:
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Inflation,
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Average earnings growth, or
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2.5% — whichever is highest.
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Inheritance and Tax Traps
The study also reveals widespread confusion about pension inheritance.
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Only 15% of people fully understand how to pass pensions to beneficiaries.
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29% are planning to do so without clarity on the rules.
Key changes:
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From April 2027, pensions will be subject to inheritance tax (IHT).
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Previously, pensions could be passed on tax-free.
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In the UK, assets above:
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£325,000 (standard threshold), or
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£500,000 (if property is included),
are taxed at 40%.
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Pensions passed to a spouse or civil partner remain tax-free.
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Beneficiaries may also face income tax if the pension holder dies after age 75, with rates up to 67% for higher earners.
Access to Pensions: The Coming “Cliff Edge”
Another critical reform involves the age for withdrawing pensions without penalties.
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Currently: 55 years old.
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From 6 April 2028: Will rise to 57 years old.
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Sir Steve Webb, partner at LCP Consultancy and former pensions minister, warns this creates a “real cliff edge” in financial planning.
He stresses that while major changes have been confirmed, the general public remains largely unaware, underscoring the need for financial advice and planning.
People Also Ask
What is the UK state pension age?
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Currently 66.
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Rising to 67 (2026–2028) and 68 (2044–2046).
What is the UK pension triple lock?
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A government policy ensuring pensions rise annually by inflation, average wage growth, or 2.5% — whichever is higher.
How many years of contributions are required for a full pension?
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35 years of National Insurance contributions or credits.
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Many mistakenly believe fewer years are sufficient.
Will inheritance tax apply to pensions?
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From April 2027, most pensions will be subject to inheritance tax.
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Pensions passed to a spouse or civil partner will remain tax-free.