Expression of wishes

Essentially, an expression of wishes, sometimes known as a nomination form, allows you to designate one or more beneficiaries whom you would like to inherit your pension pot when you die.

While many people draw up an expression of wishes when they first open their pension, it’s easy to forget that it should be updated as you move through life. For example, on happy occasions such as getting married and having children, but also on sad occasions such as the death of a loved one or divorce. Its good practice to review it every year when you get your annual pension statement.

But I have a Will already, isn’t that enough?

The short answer is no! This is because, without an expression of wishes in place:

• The pension trustees can only pay benefits to a dependent if there is one. With an expression of wishes you can nominate any individual, who may not be a dependent, to inherit your drawdown pot
• If there is no surviving dependent, then benefits can then go to any individual but only in the form of a lump sum, not by a drawdown pot
• If payment is by a lump sum, this amount falls into the recipient’s estate for Inheritance Tax. It is also unlikely to be as tax efficient as an inherited drawdown pot, for both Income Tax purposes and Inheritance Tax purposes.

Unlike a Will, nominations or expressions of wish are not actually legally binding, but in most cases, pension providers will mostly pay out according to their clients’ wishes, but they must take into account all potential beneficiaries and have the discretion to select different beneficiaries if they feel this is more appropriate. The advantage of this approach is that if the trustees of the pension have discretion over who they pay death benefits to, the benefits are normally free from Inheritance Tax.

What happens if I don’t update my expression of wishes?

Following the introduction of Pension Freedoms, keeping your expression of wishes up to date is the best way to ensure your pension goes to your intended beneficiaries – otherwise, your money may not be distributed according to your wishes.

Failing to update your expression of wishes could therefore make the process of settling death benefits a difficult and protracted experience for your beneficiaries at an already painful time.

Intergenerational discussions

It is also equally important to ensure that, wherever possible, you have conversations with the potential eventual inheritors of these pension benefits. Our retirement experts are here to assist you with all aspects of your retirement planning needs and in starting these conversations with family well in advance.