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Preparing for the future – don’t forget your pension!

In order to make life easier for your loved ones after you pass, you should ensure that you have thought about what you would like to happen to your assets. You may assume that it is enough to have prepared a will and forget that a will may not be sufficient to distribute everything you own. Pensions and death in service benefits will frequently pass outside of your ‘will estate’ and should therefore be considered in addition to having a will prepared.

Discretion of pension provider

Pension savings will often be payable at the discretion of the pension provider after death – and not by what is covered in your will. In order to decide to whom the pension will be paid, the provider will undertake an investigation to determine who they feel should benefit. This will often be a spouse or children but will depend on each individual’s specific family circumstances.

Expression of wishes

When a pension is set up, the provider will send a nomination form which allows you to express your wishes in the event of your death. This is not a legally binding deed but it will offer guidance to your provider as to what you would like to transpire.

This form should be completed and sent to the pension provider. It should also be kept in mind if your circumstances change (for example the death of a nominated beneficiary or a break down in relationship).

Not leaving an expression of wishes

If you have not completed a nomination form, the pension provider will need to obtain information from your executor or next of kin after your death before making its decision. This can take time to do which could be detrimental to those you leave behind if they would benefit from access to the money more quickly. It also may mean that your pension providers do not know who you would have liked to benefit.
The provider will most likely send forms to your executor/next of kin to complete in order to ascertain your family situation and they may also look at the will – but this is not guaranteed.

It is therefore very important that you not only ensure the pension provider has your nomination form, but also that you keep it updated if your circumstances change.

Points to remember!

You should keep in mind the following points when planning how you wish your pension to be divided on your death:

  1. Your will does not provide for who you wish your pension to go to where your pension is held in trust so make sure you consider this when preparing or updating a will.
  2. You should always ensure that you have completed the pension provider’s nomination form and ensure that you update it if circumstances change (eg a divorce/split from a partner or death of appointed beneficiary). Contact your pension provider if you are unsure of whether you have completed a nomination form or if you would like to amend it.
  3. Name your appointed beneficiaries and your relationship to them so that there is no ambiguity.
  4. If you would like to split your pension amongst several beneficiaries, you should use percentages and not specific sums of money (as you don’t know what the final amount of your pension will be on your death).
  5. It is also possible to obtain a copy of your expression of wishes and have it placed beside your will so that it is easily accessible to your executors.

Thinking about what happens on your death can be difficult, but planning in advance and ensuring your affairs are in order means those you leave behind will be better off.

If you have any questions about the topics discussed in this article, get in touch with Martin or a member of the Private Client team.