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Pension Nomination

Also known as: Expression of Wish, Pension Beneficiary Form

Definition

A pension nomination (or expression of wish) is a form telling your pension provider who should receive your pension savings if you die, though the decision ultimately rests with the pension scheme trustees.

Completing and regularly updating your pension nomination is crucial because pensions sit outside your estate and aren't covered by your will—making this form essential for ensuring your wishes are followed.

What Does Pension Nomination Mean?

Under the Pensions Act 2004 and Pension Schemes Act 1993, pension nominations—also called "expression of wish" or "letter of wishes"—are non-binding documents that guide pension trustees' decisions about who receives death benefits. Unlike your will, pension nominations don't legally control what happens to your pension savings. Instead, they express your preferences to trustees (the people who manage your pension scheme), who have discretionary power to make the final decision. This separation from your estate is deliberate: it historically kept pension death benefits outside your estate for inheritance tax purposes, though this is changing from April 2027.

In practice, pension trustees follow nominations in over 95% of cases. When you die, trustees investigate your circumstances at that time—not just when you completed the form years earlier. James, age 45, nominated his wife Sarah to receive his £180,000 workplace pension. If James dies, trustees will almost certainly honour this straightforward nomination, paying Sarah directly without waiting for probate. You can specify percentages for multiple beneficiaries: Sarah might nominate 60% to her husband David and 20% each to her two adult children. Trustees typically only deviate from nominations when circumstances changed dramatically since completion—such as divorce where the form wasn't updated.

However, significant changes to pension taxation are coming. From 6 April 2027, most unused pension funds and death benefits will be included in your estate for inheritance tax (IHT) purposes, fundamentally changing pension planning. The government estimates this will affect approximately 10,500 estates that previously had no IHT liability, with average liabilities increasing by around £34,000. Spousal and civil partner exemptions will continue, and death-in-service benefits remain outside the scope of IHT. Crucially, pension nominations will remain non-binding after 2027—trustees retain discretion even though death benefits now potentially incur inheritance tax. Forms should be reviewed every 2-3 years or after major life events: divorce, remarriage, new children, or estrangement from named beneficiaries.

Common Questions

"What happens to my pension if I die before I retire?" Your pension savings won't automatically go to your spouse or follow your will. Instead, your pension provider decides who receives the money, guided by your pension nomination form. If you've completed a nomination naming your preferred beneficiaries, the pension trustees will almost always follow your wishes. Without a nomination form, trustees investigate your circumstances and decide based on their discretion—typically prioritising spouses, partners, and financially dependent children.

"Is my pension nomination legally binding, or can my pension provider ignore it?" Pension nominations are not legally binding in most UK schemes—the final decision rests with pension scheme trustees. However, they follow nominations in over 95% of cases. The non-binding nature is actually beneficial: it historically kept pension death benefits outside your estate for inheritance tax purposes (changing from April 2027). Trustees might deviate only if circumstances changed significantly since you completed the form, such as divorce or estrangement from named beneficiaries.

"Do I need to update my pension nomination after getting divorced or remarried?" Yes, absolutely—this is one of the most common and costly mistakes. Divorce doesn't automatically cancel your pension nomination, so if you named your ex-spouse years ago and never updated it, they might still receive your pension death benefits based on the existing nomination. Similarly, remarrying doesn't automatically add your new spouse. You must proactively contact your pension provider and update your beneficiaries after any major life change.

Common Misconceptions

Myth: "My will covers everything I own, including my pension, so I don't need a separate pension nomination."

Reality: Pensions sit completely outside your estate and are not controlled by your will. Even the most comprehensive will has no power over pension death benefits because pensions are held in trust and governed by pension scheme rules, not testamentary documents. You must complete a separate pension nomination form for each pension you hold. Without one, pension trustees will decide who receives your pension based on their investigation of your circumstances, which may not align with your wishes or your will's provisions.

Myth: "Once I've completed a pension nomination, it's legally binding and my pension provider must follow it no matter what."

Reality: Pension nominations are deliberately non-binding in most UK schemes. Trustees have discretion to make the final decision, though they follow nominations in over 95% of cases. This non-binding nature historically allowed pension death benefits to remain outside your estate for inheritance tax purposes (though this is changing from April 2027). Trustees might use their discretion if your circumstances changed dramatically since completing the form—such as divorce, estrangement, or new dependents—and you failed to update it, ensuring death benefits go to appropriate beneficiaries rather than outdated nominations.

Understanding Pension Nomination connects to these related concepts:

  • Beneficiary: Pension nominations specify who your beneficiaries are for pension death benefits, making them receive money directly without probate.
  • Death Benefits: Pension nominations control how pension-specific death benefits are distributed to your chosen recipients.
  • Pension: Your pension is the asset; the pension nomination is the instruction form for that asset's distribution after death.
  • Discretionary Trust: May be used when nominating minor children who cannot receive lump sums directly until they reach adulthood.
  • Estate Planning: Pension nominations are a critical component of comprehensive estate planning that must be coordinated with your will and other documents.
  • Estate Planning Essentials for New Pension Savers: Essential guide explaining why completing pension nominations early prevents complications for new workplace pension members.
  • Managing Multiple Pensions in Your Estate Plan: Discusses coordination of pension nominations across several workplace pensions accumulated throughout your career.
  • Pension Death Benefits and Inheritance Tax: April 2027 Changes: Addresses upcoming tax changes affecting pension nomination strategy and beneficiary planning.
  • Divorce and Your Estate Plan: What to Update: Details step-by-step process for updating frequently overlooked pension nominations post-divorce.
  • Second Marriages and Estate Planning: Explains pension nomination considerations in blended families balancing obligations to current spouses and children from prior relationships.

Need Help with Your Will?

While pension nominations sit outside your will, coordinating your pension beneficiaries with your overall estate plan ensures your wishes are followed comprehensively. Understanding how all your assets pass to loved ones—both through your will and separately through pension nominations—creates a complete picture of your legacy.

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Legal Disclaimer: This glossary entry provides general information about UK legal terminology and does not constitute legal advice. Pension rules and tax treatment can vary by scheme type and individual circumstances. Always verify the specific rules of your pension scheme with your provider and consider professional financial advice for complex situations, particularly regarding the April 2027 inheritance tax changes. For advice specific to your situation, consult a qualified solicitor.