Why your pension nomination matters more than ever

Many people have treated their pension as a tax-efficient way to pass wealth on to loved ones. However, for deaths occurring on or after 6 April 2027, the IHT treatment of pensions is changing, which means it's more important than ever to check who you've nominated to receive your pension benefits when you die.

A pension nomination (sometimes called an Expression of Wish form) tells your pension provider who you would like to receive your pension savings after your death.

While pension trustees or administrators usually make the final decision, they will generally take your expression of wish into account when deciding who should receive any death benefits.

Keeping this information up to date can help:

• Tell the trustees who you would like to receive your pension benefits, helping to guide their decision when benefits are paid

• Reduce the risk of delays or family disputes

• Help your beneficiaries receive benefits in the most appropriate way

• Support wider estate planning arrangements

• Reflect important life changes such as marriage, divorce or the birth of children or grandchildren

What is changing in 2027?

From 6 April 2027, most unused pension funds and death benefits will be included within the value of your estate for inheritance tax purposes. Historically, pensions have often sat outside an estate for IHT purposes, making them a valuable estate-planning tool.

For some families, this could mean a larger inheritance tax bill than they might have expected.

The position may be particularly important if death occurs after age 75 or after. In these circumstances, beneficiaries may also have to pay income tax when they take money from an inherited pension, depending on their own tax position.

Common reasons to review your expression of wish

Many people complete their expression of wish / nomination form when they first set up a pension and then never look at it again.

You may need to update yours if:

• You have married or entered a civil partnership

• You have divorced or separated

• You have a new partner

• Children or grandchildren have been born

• You have consolidated pensions or moved to a new provider

• Your wishes have changed since writing your will

• Your financial circumstances are different from when the nomination was originally completed

A simple review could make a big difference

Reviewing your pension nomination is usually straightforward and often takes only a few minutes.

Ask yourself:

• Does my expression of wish / nomination still reflect my wishes?

• Have I included everyone I would want considered?

• Does it align with my will and wider estate plans?

• Have I moved pension providers since completing the form?

• Does my adviser and pension provider have the latest version?

What should you do now?

With the 2027 changes approaching, now is an ideal time to review your pension arrangements alongside your will and broader estate plan.

A pension expression of wish is a simple document, but it can play an important role in helping your wealth pass to the right people at the right time. Taking a few minutes to review it today could help avoid unnecessary complications and potentially improve outcomes for your family in the future.

It is also worth making sure your personal representatives know where your pension savings are held, so they can notify the relevant providers promptly if needed. With tighter timeframes applying to deaths on or after 6 April 2027, having this information readily available will become increasingly important. You should also seek independent financial advice to understand how the changes could affect your pension and estate planning.

Note: 

• Pension benefits passed to a spouse / civil partner or to a charity, are generally exempt from IHT. 

• IHT only arises above the nil-rate bands. 

This article is for general information only and does not constitute financial or tax advice. Tax treatment depends on individual circumstances and may change in the future.