The government and industry have been urged to increase awareness about the upcoming rule changes relating to pensions and inheritance tax (IHT), after research from Nucleus found that the majority of people did not know the reforms were happening.

More than two thirds (67 per cent) of UK adults who believed the changes could apply to them were unaware of the upcoming reform, despite it only being months until most unused pensions are included in an estate for IHT purposes.

Of the 31 per cent of all respondents who were aware of the changes, Nucleus found that few had taken action.

Almost one in five (19 per cent) respondents had not done anything about it, while just 4 per cent had spoken to a financial adviser about the changes and 2 per cent had reviewed or updated their will.

Only 1 per cent of adults had made alterations to their pension, investment, or other financial arrangements, and 5 per cent had researched the changes to better understand them.

Nucleus stated that, with the changes coming into effect in April, there was a real and urgent need for the government and industry to take action to improve understanding and engagement.

Although awareness and action improved with age, 56 per cent of those aged 55 and over were unaware of the changes, while just 6 per cent had spoken to an adviser and 2 per cent had altered financial arrangements.

While 27 per cent of those aged 55 and older believed they were unlikely to be unaffected, 33 per cent of all UK adults expected to receive some form of inheritance and 38 per cent were actively planning to leave money or assets.

“Retirement confidence is being undermined by a policy landscape that too often shifts beneath people’s feet,” said Nucleus technical services director, Andrew Tully.

“Frequent legislative and tax changes, including the move to bring most unused pension funds in scope for IHT, risk eroding trust and making long-term planning harder.

“With the new rules only months away, the government must urgently step up communication. The changes will create additional administrative and financial pressure for beneficiaries and personal representatives at an already difficult time, yet public awareness remains worryingly low.

“When pension policy is repeatedly revisited, revised or reversed, certainty becomes harder to achieve. Clear, consistent policy and timely communication are essential if people are to plan for retirement with confidence.

“What has not changed is the value of regulated financial advice. Planning for retirement is increasingly complex and the changing IHT rules have the potential to cost many families dearly without proper, informed preparation.”

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