WHO INHERITS YOUR PENSION? AVOIDING COSTLY OVERSIGHTS
Don’t let uncertainty get in the way of your wishes
It’s a question many people have never asked themselves but should: who will inherit your pension if you pass away before accessing it? According to new research from Aviva¹, one in six people with a partner admit they don’t know who their pension beneficiary is. This matters more than people may realise. Pensions aren’t automatically covered by your will, and without a valid, up-to-date nomination form, your savings might not go where you intend. That’s why taking a few simple steps now can help prevent financial and emotional stress later.
Your pension is part of your legacy
The majority of people have made a nomination but not everyone gets it right. In the research, 65% of people named their spouse or partner, and 20% chose another family member. A small proportion opted to leave their pension to a friend or charity. The bigger concern is that many people are unaware of who they’ve nominated or whether they’ve done so at all. The risk of a pension going to the wrong person, or being delayed in probate, increases when the paperwork hasn’t been reviewed.
Unmarried couples are especially at risk
People who are cohabiting but not married or in a civil partnership are particularly vulnerable to this issue. In these cases, the default inheritance rules don’t apply, and 25% of these individuals said they didn’t know who their nominated beneficiary was. Without a formal nomination, your partner may not automatically receive anything, regardless of how long you’ve been together.
This could mean a serious financial impact on a surviving partner, especially if they were relying on your pension for part of their income or stability.
Outdated nominations are surprisingly common
Even more worrying, 3% of people believe their pension beneficiary might still be an ex-partner. A separate study from Legal & General² found that one in ten divorcees have forgotten to update their life insurance beneficiary, and similar trends are likely across pensions.
Life changes. Whether it’s divorce, remarriage, children or grandchildren, your pension nominations should reflect your current wishes. It’s easy to forget these details but not fixing them could cause significant distress for the people you care about most.
Reviewing your beneficiary is quick and essential
It’s good practice to review your nomination form whenever your life circumstances change and to check in periodically even if they haven’t. You can usually do this through your pension provider’s online portal or by requesting a form.
Importantly, a nomination form is not legally binding, but it provides your pension provider or scheme trustees with clear direction when making decisions about your death benefits. The more up to date and unambiguous your instructions are, the better.
Protect your intentions and your loved ones
Your pension could be one of the largest assets you leave behind. Making sure it goes to the right person is a simple step that can offer real peace of mind.
If you’re unsure who would inherit your pension, or whether your nominations are up to date, speak to a financial adviser. We can help you review and clarify your arrangements.
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