A prominent pension provider, Royal London, carried out a survey on those aged between 55 and 64 years and discovered that the pensions of 750,000 people approaching retirement will pass to the wrong person.
Whenever you have a pension pot, whether it be with your employer or one you have set up personally, you are usually asked to nominate your beneficiaries via an “Expression of Wish” form. Your pension will likely not then pass according to instructions in your Will, but will be inherited by whomever you nominate on the Expression of Wish form (different rules apply for Defined Benefit schemes).
Now, the problem is that having another form to remember to complete means that it is easily forgotten or overlooked. This becomes an issue if circumstances change, for example if you get divorced, remarry or simply no longer want that beneficiary to benefit.
To make sure your chosen beneficiaries receive your pension it is best to set up an Asset Preservation Trust, which nominates specific categories of beneficiary. This means, for example, that your pension could be passed on to your children, grandchildren, great grandchildren or others without you having to update Expression of Wish forms with each individual name or every time something changes. A Letter of Wishes can be attached to the Trust explaining the proportions you would like each beneficiary to receive, or with any other further details or instructions. Only one Expression of Wish form that allocates the Trust as the beneficiary of your pension will be needed, the Asset Preservation Trust then does the rest.
If a Trust is not something you would be interested in, you should at least check that your pension will go to the right people. If your pension is managed through us you should be able to use your login details to check this, or you could call us to find out. If it is not, you will need to contact your specific provider.
If you have any more questions about pensions or retirement come along to our FREE Pension Review Seminar on 25th April. You can book your place here.