Approximately one-sixth of individuals are uncertain about the beneficiary of their retirement pension benefits
In the UK, from April 2027, naming a beneficiary for your pension will become even more important from a tax perspective, as new inheritance tax (IHT) rules on pensions come into force.
A recent survey revealed that a concerning 3% of savers have named their ex-partner as the beneficiary of their pension, highlighting the importance of keeping beneficiary information up-to-date.
To update your pension beneficiary details, you should first contact your past employers to find out who the pension provider is. Once you have this information, you can get in touch with the provider to update your nomination.
Completing an expression-of-wish form will become an important part of tax planning as a result. This form, often known as a beneficiary nomination form, allows you to formally designate who you want to receive your pension benefits after your death.
It is essential to keep this beneficiary information up-to-date by reviewing and amending it regularly, particularly after major life events such as marriage, divorce, or the birth of children.
Maintaining current pension beneficiary nominations is crucial for several reasons:
- It ensures that your pension benefits are distributed according to your wishes, avoiding potential delays or disputes among heirs.
- Up-to-date beneficiary details assist pension scheme administrators in quickly identifying and contacting the correct recipients of benefits after a member’s death, which streamlines the process and reduces complexity.
- Accurate beneficiary information supports compliance with inheritance tax reporting requirements, as pension providers must disclose beneficiary details to personal representatives and HM Revenue & Customs.
- If beneficiary details are incorrect or outdated, it can cause delays in the payment of funds, create tax complications, and possibly lead to unintended beneficiaries receiving benefits.
It's not surprising that people lose track of their pensions, especially considering that after the family home, a pension is often a household's most valuable asset. To ensure your pension goes to your loved ones as intended, you need to make arrangements with your pension provider by filling in a form, often known as an expression-of-wish form or a beneficiary nomination form.
If you have several pensions with different providers, you will need to complete a form for each one. Failing to complete or update your nomination could leave your loved ones facing delays in accessing funds, or land them with an inheritance tax bill that could potentially have been avoided.
It's worth noting that just one in 10 people under the age of 30 have completed an expression-of-wish form. Forty percent of over-60s have not set out their intentions. This underscores the importance of taking action to ensure your pension benefits are distributed as you wish after your death.
On average, men (40%) are slightly more likely than women (34%) to have named a beneficiary. One in six UK adults with a partner do not know who will inherit their pension savings if they die before taking them.
To sum up, maintaining current pension beneficiary nominations is essential to protect your retirement savings and ensure tax-efficient transfer of pension benefits to the intended individuals without procedural holdups or legal challenges. By keeping your pension beneficiary information up-to-date, you could be providing security and peace of mind for your loved ones.
- To ensure the tax-efficient transfer of your pension benefits and prevent potential disputes, it is crucial to keep your beneficiary information up-to-date, especially in light of the new IHT rules on pensions coming into force in the UK from April 2027.
- Maintaining current pension beneficiary nominations is essential to adhere to inheritance tax reporting requirements, as correct beneficiary information must be disclosed to personal representatives and HM Revenue & Customs.
- Considering that after the family home, a pension is often a household's most valuable asset, it is essential to complete an expression-of-wish form or a beneficiary nomination form with your pension provider to ensure your retirement savings are distributed as you wish after your death.
