Where there’s a (pension) will…..

What is a pension will and why do you need one?

Recent research from pensions provider, Canada Life reveals three quarters of UK adults have never completed a ‘pension will’. This is done via an expression of wish form, which nominates beneficiaries in the event of the passing of the person with the pension benefits.

“This figure really surprises me as it’s such an important, yet simple thing to do” says Helen Milburn, private client associate solicitor at Jacksons Law

“Although I’m not a huge fan of the term ‘pensions will’, completing one as part of an expression of wishes form is as crucial as making a Will to nominate who receives your pension benefits on death. These benefits can be hugely valuable and are sometimes an overlooked part of someone’s estate.

Unlike the strict legal formalities involved in creating a will, a ‘pension will’ is in the form of an expression of wishes and it is usually the case of completing and signing a standardised, yet simple form provided by your individual pension provider to nominate your chosen beneficiaries. It goes without saying it is imperative for planning for the future to make a will to cover all your estate assets and a ‘pension will’ to cover your pension benefits” says Helen

The Canada Life research also found that in the crucial 55 and over age group, 71% of people say they have not completed a ‘pension will’.

An up-to-date expression of wish form is held by your pension provider, and in the unfortunate event of your death, it will help to distribute the pension quickly and efficiently – considering your views. Failure to complete an expression of wish form could result in delays to any beneficiaries receiving the pension, or worse – the possibility of unintended beneficiaries receiving the pension benefits.

“A vital part of our financial advice service is to ensure that clients have not only completed an expression of wish form, but as Helen says ensuring that it is up to date. It’s very important for the client to ensure their pension goes to who they want, but also to ensure any extra tax isn’t paid unnecessarily”. says Emma Cherrington, independent financial adviser

Pension benefits do not usually form part of the deceased estate for inheritance tax purposes and chosen beneficiaries can access them tax free if the deceased passed away before age 75, or if over 75, at their own marginal income tax rate. However, this depends on the benefits being designated within 2 years of death. If this is not the case, then the pension can go back into the estate and be subject to inheritance tax. This shows the real importance of the expression of wish form.

Emma adds “If you are unsure if you have completed this form, or you aren’t sure if it’s up to date, you can contact your pension provider, or your financial adviser and they will confirm this for you. To add a beneficiary or make amendments it is a very simple process and the person being added or removed will not be made aware of this”

“It is crucial to remember that pensions are not linked, so you must make this expression of wish on every pension you have, whether it is one that you have arranged yourself or your employer has done on your behalf”

The Financial Conduct Authority does not regulate taxation advice.

The content of this blog is for information only and must not be considered as financial advice.  We always recommend that you seek independent financial advice before making any financial decisions.

Levels, bases of and reliefs from taxation may be subject to change.


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