Pensions are usually not covered by your will
Many people assume that whoever they name in their will automatically inherits everything they own, including their pension. In fact, most private and workplace pensions sit outside your estate and are not distributed according to your will at all. Instead, the pension scheme trustees or the provider normally have discretion over who receives the death benefits, guided by a form you complete called an "expression of wish" or "nomination of beneficiary" form.
This is actually a valuable feature, because assets held outside your estate are generally not counted for inheritance tax purposes in the same way as assets you own directly, which is one reason pensions can be an efficient way to pass on wealth. But it also means that simply updating your will is not enough to control what happens to your pension.
Why the expression of wish form matters
When you join a pension scheme, or at any point afterwards, you can complete an expression of wish form telling the scheme who you would like to receive any remaining pension funds if you die. This is not usually legally binding in the way a will is; the trustees retain discretion to decide who actually receives the money, taking your wishes into account alongside the actual circumstances at the time of your death, such as who was financially dependent on you. In practice, trustees generally do follow a clearly and recently expressed wish, and having one up to date makes it far more likely your intentions are honoured, and can also help speed up the process for your family.
Without a valid nomination on file, the scheme may have to make a more complex decision about who should benefit, which can take longer and may not reflect what you would have wanted.
Keeping your nomination up to date
Life events are the main reason nominations fall out of date. It is worth reviewing your expression of wish whenever you experience:
- Marriage or entering a civil partnership
- Divorce or separation
- The birth or adoption of a child
- The death of a previously named beneficiary
- A significant change in who depends on you financially
Because each pension scheme holds its own nomination separately, if you have several pensions from different jobs, you need to update the form with every provider individually. A change reflected in your will has no automatic effect on any of them.
Tax treatment: death before and after age 75
How pension death benefits are taxed for your beneficiaries depends significantly on your age when you die.
| When you die | General tax treatment for beneficiaries |
|---|---|
| Before age 75 | Death benefits can normally be paid to beneficiaries free of income tax, whether taken as a lump sum or as a drawdown income, subject to certain allowance limits |
| Age 75 or later | Death benefits are normally taxable on the beneficiary as income at their own marginal rate, whether taken as a lump sum or drawdown income |
Because pension and inheritance tax rules are subject to periodic government reform, always check the current position via GOV.UK or MoneyHelper, or speak to a regulated financial adviser, particularly given ongoing changes to how pensions interact with inheritance tax.
How this fits with your wider estate plan
Because pensions typically pass outside your will, it is important to think of your expression of wish forms as a core part of your estate planning alongside your will, rather than an administrative afterthought. If you want a spouse, partner, children or anyone else to benefit from your pension after you die, make sure the right form is on file with every scheme you hold, and mention your pensions when discussing your overall estate plan with a solicitor or financial adviser.
Key takeaways
- Most pensions sit outside your estate and are not distributed according to your will.
- An up-to-date expression of wish form guides the scheme trustees, who usually retain final discretion over who receives death benefits.
- Review and update your nomination after marriage, divorce, having children or any other major life change, with every provider you hold a pension with.
- Tax treatment for beneficiaries generally differs depending on whether you die before or after age 75.
- Treat pension nominations as an essential part of estate planning, separate from and in addition to your will.