Why You Should Check Your Pension Death Benefit Nomination Before April 2027

Why it matters  

Unlike your Will, pension benefits are usually paid at the discretion of the pension scheme trustees or provider. Your Expression of Wishes is not legally binding, but it gives them a clear indication of who you would like to receive your pension benefits. In most cases, it will be followed unless there is a compelling reason not to. 

Life changes quickly. Marriage, divorce, children, grandchildren and bereavement can all mean your original nomination no longer reflects your wishes. 

We’ve seen clients discover they are still nominating an ex-partner, or that only one child is listed despite the family having grown considerably.

The April 2027 tax changes

This review has become even more important because of the significant inheritance tax changes due to take effect from 6 April 2027. 

Currently, unused pension funds generally sit outside your estate for inheritance tax purposes. From April 2027, unused pension funds and death benefits are expected to form part of your estate when calculating any inheritance tax liability. 

The details of the new rules may still evolve before April 2027, so it is important to keep plans under review and take advice based on your circumstances. 

For some families, these changes may mean it is worth reviewing whether a surviving spouse or civil partner should be the primary beneficiary, rather than children directly. While every family’s circumstances are different, the inheritance tax exemption available on transfers between spouses and civil partners could make this a more tax-efficient approach in some cases. 

That won’t be the right solution for everyone. Blended families, second marriages and wider estate planning objectives may point towards a different approach, which is why it’s important that your pension nominations are considered alongside your overall financial plan. 

Don’t forget old pensions

Many people accumulate several pension pots over the course of their career. Each scheme will usually have its own Expression of Wishes form, meaning your nominations may not be consistent across all of your pensions. 

The forthcoming inheritance tax changes may also make pension consolidation worth considering from an administration perspective, where it is suitable for your circumstances. 

From April 2027, executors are expected to need information from every pension provider to establish the value of pension death benefits for inheritance tax purposes. Where someone has multiple pension arrangements, this could mean contacting each provider individually, gathering valuations and completing separate sets of paperwork before the estate can be administered. 

There can also be practical benefits. Estates are often cash-poor, with much of the wealth tied up in property. If pension funds are used to help settle an inheritance tax liability, dealing with one pension provider is generally simpler than coordinating several different schemes. Fewer pension arrangements can also reduce the time, complexity and potentially the professional costs involved in administering an estate. 

Where appropriate, consolidating pensions may therefore offer benefits beyond simply making your retirement savings easier to manage. As always, any decision should take account of investment options, charges and any valuable guarantees or benefits that could be lost by transferring. 

A five-minute review

Updating your nomination form is usually straightforward and, with most providers, can now be completed online. 

It’s worth reviewing your nomination if any of the following apply: 

• You’ve married, divorced or entered a civil partnership. 

• You’ve had children or grandchildren. 

• Someone you’ve nominated has died. 

• You have pensions with previous employers. 

• Your financial circumstances have changed significantly. 

• You’ve never completed a nomination form. 

• You can’t remember the last time you looked at it. 

We can help

The April 2027 changes are likely to prompt many people to rethink how their pensions fit into their wider estate planning. 

If you’re unsure who you’ve nominated, whether your current arrangements remain appropriate, or whether consolidating pensions could simplify matters for your family, please get in touch. We can review your existing arrangements, help update your nominations and, where pensions are held under our agency, support your family with the administration process should the need ever arise. 

A short review today could help ensure your pension passes to the right people, in the most appropriate way, while making life a little easier for those left behind.