How to nominate pension beneficiaries

If you’ve got a defined contribution pension, whether it’s a personal pension like a self-invested personal pension (SIPP) or a workplace scheme, you’ll be able to leave it to the beneficiaries of your choice when you die. 

You can leave your pension to a spouse or partner, or you might decide to give it to your children or other family members, or even a friend, or a charity that’s important to you. 

However, to ensure your money ends up in the right place, you must leave instructions to your pension provider. 

You can do this by completing an ‘expression of wishes’ or ‘nomination’ form for every private pension that you have. 

How to complete an expression of wishes form 

An expression of wishes form is a crucial piece of pension paperwork that informs your provider who you would like to inherit your pension upon your death. 

You should have been given the opportunity to complete one when you opened your account, but if you didn’t get around to it, you can do it at any point. 

These forms are usually available online, but if you can’t find them, you can give your provider a call. 

You can leave your pension to just one person if you prefer, or you can divide it between many different people. 

However, if you’re nominating multiple beneficiaries, it’s important to state what proportion of your pot each person should get, especially if you want some to get a greater share than others. 

It may also make sense to include some back-up beneficiaries, for example, children or grandchildren, in case your original beneficiaries die before you. 

If you aren’t sure who to leave your pension to, it’s worth talking to a financial adviser.  They will help ensure your loved ones are looked after and that your money is distributed in the most tax-effective way.  

Keeping your pension nominations up to date 

Like a will, it’s important to keep your pension nominations up to date. You might need to complete a new form if you have a major change of circumstances, for example, you get married, divorced, or your partner dies.

You might also want to add children or grandchildren to your list of beneficiaries, if and when they come along. 

Again, you can usually log on to your pension account at any point to update your pension provider. 

What happens if I don’t have an up-to-date nomination form? 

If you don’t leave up-to-date instructions for your pension provider, they will need to decide who should inherit any remaining funds in your pot when you die. This can cause significant delays, as well as stress and worry for your loved ones. 

To work out who should inherit your money, your pension trustees would usually conduct research to ensure it is distributed responsibly. This may involve looking at your will or making enquiries about your family. 

However, this would not take into account your wishes or any nuances to your personal situation. For example, you may not want to leave money to a child while they were going through a divorce, or if they were being declared bankrupt. 

It may also mean that your money is not distributed in a tax-effective way. 

Are my pension nominations legally binding? 

This is where it can start to get confusing. 

For most pensions, your nominations will not be legally binding – this is because pension law gives trustees the discretion to decide how to distribute your pot. 

And it’s this legislation that means your pension does not form part of your estate when you die, or become subject to inheritance tax (IHT), although this will change from April 2027 when pensions will fall under IHT. 

In the vast majority of cases, pension providers will follow your instructions. However, they also have a duty of care, which means they can override your instructions in certain situations. 

For example, if the trustees found out that you had a financial dependent who had not been catered for, they could pass some money onto them, even if you hadn’t named them as a beneficiary. 

Alternatively, they may alter the allocation if they realise that you have remarried or divorced without updating your expression of wishes. 

The only case where your instructions would be legally binding is if your pension provider acts under ‘direction’ rather than ‘discretion.’ 

In these cases, your pension trustees would have to follow your instructions (meaning it’s even more important that you can keep them up to date), but it would also mean that your pension would form part of your estate and potentially be subject to IHT. 

However, it’s very unusual for pensions to be structured in this way. 

What if I have a final salary pension? 

If you have a defined benefit pension, such as a final salary or career average scheme,  which pays a guaranteed income for life, the rules are different because you don’t have a fixed pot of cash to pass on.

When you die, your loved ones may continue to get an income. However, this will normally only be payable to certain people, including spouses, children under the age of 23 and other people who may be financially dependent on you (such as cohabiting partners). 

You don’t always need to tell your pension scheme who should get this money, but if you’re not married to your partner, it’s generally considered to be a good idea. 

If you die before you retire and while you are still working for that employer, you may be entitled to a death-in-service payment. Unlike dependents’ pensions, this money can be paid to whoever you like, so it’s sensible to nominate beneficiaries. 

Talk to a pension expert 

For some people, working out who should inherit your pension will be an easy or obvious choice. 

However, for many others, it can be challenging to decide on the right course of action. You might have a more complicated family make-up, or be keen to ensure that your loved ones don’t pay any more tax than necessary. 

In these cases, it’s advisable to consult a financial adviser. 

Unbiased can quickly match you with an FCA-regulated financial adviser that can help.