Why it’s crucial to complete your expression of wish form for your pension
Pensions can be an effective and tax-efficient way to save for your future, and contributing into one is a sensible option for many people.
But, one thing you may not have considered is what will happen to your fund when you die.
Crucially, you should be aware of the need to fill out an “expression of wish” form for your pension that details what you would like to happen to your funds in the event of your death.
If you didn’t know that you needed to do this, you’re far from alone. In fact, some rather concerning research from insurance provider Canada Life shows that nearly three-quarters of UK adults have never completed an expression of wish form for their pensions.
You don’t need to worry about filling out an expression of wish form if you work with us at Britannic Place, as it’s a standard part of the service we offer when you plan your retirement with us.
Even so, it’s still useful to be aware of what your expression of wish form is, and how having completed yours can give you and your family peace of mind for the future.
Nominating the beneficiaries of your pension
An expression of wish form is essentially a “pension will”, allowing you to nominate the beneficiaries of your pension in the event that you pass away.
You simply fill out this form with details of your chosen beneficiaries, and then return it to your pension provider who will keep hold of it for you.
The trustees of your pension scheme will then use this form to make decisions over how to distribute your funds, typically using your wishes to make this decision.
Your provider is then able to distribute your pension funds according with your wishes as soon as possible if you were to die.
Without having completed an expression of wish form, there are two major dangers that you expose your family to:
- Your provider is delayed in distributing the funds to your beneficiaries while they establish what will happen with them. Your family may need access to this money quickly on your death, and so this could put them at risk of not being able to afford bills or other important costs while this is sorted.
- Your funds may be paid to unintended beneficiaries. Without an expression of wish form, the rules revolve around who would be considered your “financial dependants”. These standard rules may see your funds distributed in a way that doesn’t align with what you’d like to happen.
At Britannic Place, we often recommend that you complete a “contingent nomination” when you fill out your form. This allows you to take advantage of the Pension Freedoms legislation over non-dependent beneficiaries.
For example, this might state that if your spouse is unable to receive the benefits for any reason, then you want them to be paid equally to your children. This should allow your children to receive any pension death benefits in the most tax-efficient and appropriate way.
All in all, this gives you greater control over how your pension benefits will be administered.
Living on non-pension assets first
One of the most important reasons to fill out an expression of wish form is for the potential Inheritance Tax (IHT) benefits that your pension might offer.
In general, pension assets are not included in the value of an estate, meaning it’s possible to pass on these funds without incurring an IHT charge on them.
So, depending on your broader financial situation and where else you have money saved or invested, it may be sensible to use non-pension assets first and leave your pension untouched.
Think of your pension like an IHT ISA: it allows you to tax-efficiently save and invest your money throughout your lifetime, and then potentially pass these funds on to your beneficiaries without having to worry about IHT.
Meanwhile, you can draw on savings and liquidate other assets or investments to provide yourself with an income in retirement.
Of course, for this to work you’ll need to have completed your expression of wish form so that your intended beneficiaries receive this money.
If you haven’t already spoken to us about this strategy, please do contact us to find out more.
Get in touch
At Britannic Place, we’ll always go through your expression of wish form with you when you start working with us.
Regardless, if you have any questions about what will happen to your pension funds when you pass away, please do get in touch.
Email firstname.lastname@example.org or call 01905 419890 to speak to us today.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.