Pensions and Wills UK (2026): Does Your Pension Pass Through Your Will?

No — pension assets are held by pension trustees on trust and fall OUTSIDE your estate in almost all cases. Your will does not control the distribution of defined contribution pension funds, defined benefit death-in-service lump sums, or other pension death benefits. Your pension is not an asset that you 'own' in the same way as your bank account or property — it is held on trust for your benefit by the pension trustees during your lifetime and distributed by the trustees according to the scheme rules and their discretion after your death. The mechanism: (1) Most UK workplace pensions (defined contribution — DC — and defined benefit — DB) are established as trusts. The pension fund is legally owned by the trustees, not by the member; (2) On the member's death, the trustees decide who receives the death benefits (lump sum and/or pension). They exercise discretion under the scheme rules; (3) Because the pension is not part of the member's estate, it does NOT pass through the will. The executor has no authority over it and the probate process does not involve pension assets; (4) Because pension assets are outside the estate, they are not generally subject to inheritance tax — though this is changing significantly from April 2027 (see Finance Act 2024 below); (5) The main mechanism for influencing the trustees' decision is the EXPRESSION OF WISHES (also called a nomination form). This tells the trustees who you would like to receive the death benefits. The trustees take this into account but they are NOT legally bound by it — they retain discretion. The discretionary nature of pension death benefits is the reason pensions stay outside the estate for IHT; (6) If no expression of wishes is submitted: the trustees will use their own judgement, usually based on scheme rules and whoever comes forward as eligible dependant. The payment may not go to the person you would have chosen.

The reason pensions are outside the estate and probate relates to trust law: the pension fund is NOT owned by the member — it is owned by the trustees. On the member's death, the trustees distribute the pension assets according to scheme rules and their discretion, without needing a Grant of Probate. Effects: (1) Probate speed: pension death benefits can be paid by trustees as soon as they make their decision, without waiting for a Grant of Probate (which can take 6-12 months). This can provide critical financial support to surviving family members before the estate administration is complete; (2) Privacy: pension distributions are private — they do not appear in the public probate register; (3) IHT (UNTIL APRIL 2027): defined contribution pension pots and most defined benefit death benefits are currently outside the taxable estate for inheritance tax purposes. A surviving member's unused pension pot can pass to beneficiaries free of IHT. This is a significant IHT advantage — many people with substantial pension funds plan their estate on the basis that pensions are IHT-free; (4) APRIL 2027 CHANGE (Finance Act 2024): from April 2027, unused pension funds and death benefits from defined contribution pensions will be brought INTO the estate for IHT purposes. This is one of the most significant pension changes in decades. The trustees will be responsible for reporting and paying the IHT attributable to pension death benefits. This does NOT eliminate the probate advantage (pension assets still won't go through probate) but it eliminates the IHT advantage for most large pots. Defined benefit death-in-service lump sums are also affected. Financial planning ahead of April 2027 is important — pension drawdown strategies, nominations, and lifetime gifting may all need review; (5) Income tax on pension death benefits: if the member dies before age 75, the beneficiary generally receives the pension fund income-tax-free. If the member dies aged 75 or over, the beneficiary pays income tax at their marginal rate on any pension income or lump sums drawn from the fund.

An expression of wishes (also called a nomination form, death benefit nomination, or beneficiary nomination) is the form you complete to tell your pension trustees who you would like to receive the pension death benefits when you die. Key points: (1) NOT legally binding: unlike a will, an expression of wishes is NOT a legally enforceable instruction to the trustees. The trustees retain discretion. They must take your wishes into account, but they can override them if there are good reasons — for example, if your named nominee has predeceased you, if the nominee is a minor with no suitable trustee, or if new information about your circumstances comes to light; (2) The reason for discretion: if the pension trustees were legally bound by the nomination, the pension death benefits would constitute a 'right' of the nominee and would be included in the member's estate for IHT. The discretionary nature of the trustees' decision is what keeps the benefits outside the estate (until April 2027 changes); (3) Practical effect: in practice, pension trustees almost always follow the member's expressed wishes if the form is up to date, clearly completed, and the named nominees are identifiable and alive. Non-compliance is rare and usually arises only when circumstances have changed significantly; (4) Who can be named: anyone — a spouse, civil partner, cohabiting partner, children, other family members, friends, a charity, or a trust. There is no restriction to 'dependants' for DC pensions in modern schemes, though older DB schemes may have more restrictive rules; (5) CRITICAL: update it regularly. A common failure: pension nominations made decades ago name an ex-spouse, a deceased parent, or an estranged sibling. You must update your expression of wishes after every significant life event — marriage, divorce, new child, death of a named nominee, or change in circumstances; (6) Multiple pensions: you must complete a separate expression of wishes for EACH pension scheme. A nomination for one pension does NOT cover others. Many people have DC pensions from multiple employers — each needs its own form; (7) For defined benefit (DB) pensions: the death benefits are typically a lump sum (multiple of salary) plus a dependent's pension (typically for a surviving spouse or civil partner, and sometimes children). The expression of wishes covers the lump sum. The dependent's pension rules are fixed by scheme rules and cannot be changed by the member.

If you die without a completed expression of wishes, or with an outdated one (naming someone who has already died), the pension trustees must exercise their full discretion under the scheme rules: (1) The trustees will investigate your circumstances: who was financially dependent on you; who comes forward to claim; what evidence of your relationships exists; what your will says (not binding on them, but relevant context for their discretion); (2) Most scheme rules give priority to: (a) A legally married spouse or civil partner; (b) Qualifying dependants (children in full-time education; cohabiting partners with financial dependency); (c) Other persons nominated in a previous form or in the member's will. The will is not binding on the trustees, but it provides useful evidence of the member's intentions; (3) Cohabiting partners: if you are cohabiting (not married) and have no expression of wishes, your partner is NOT guaranteed to receive the pension death benefits. They may receive them if the trustees are satisfied of the dependency relationship — but this is not certain. Completing an expression of wishes naming your cohabiting partner is critical; (4) Time: without guidance from an expression of wishes, the trustees' investigation takes longer. The decision may be delayed by months while they trace potential claimants; (5) Defined benefit pension: if there is no surviving qualifying dependant, the lump sum death benefit goes to whoever the trustees decide (or in some schemes, to the estate under specific rules). The dependent's pension: if there is no surviving spouse, civil partner, or qualifying dependant, there may simply be no dependent's pension payable; (6) The practical advice: complete and update the expression of wishes for every pension scheme. This takes 10-15 minutes per scheme and can prevent months of uncertainty for your family.

A comprehensive estate plan must address BOTH the will AND pension nominations because they operate independently and cover different assets: (1) WHAT YOUR WILL COVERS: all assets in your personal estate — property; bank accounts; savings; investments; personal possessions; business interests; life insurance NOT written in trust; digital assets; anything owned in your sole name or as a tenant in common. The will instructs your executor who inherits these assets; (2) WHAT YOUR PENSION COVERS: pension death benefits (lump sums; annuity payments; DC pension pot; DB dependent's pension). The expression of wishes tells trustees who you'd like to receive these. NOT controlled by your will; (3) WHAT LIFE INSURANCE IN TRUST COVERS: a life insurance policy written in trust passes to the trust beneficiaries on death, outside the estate, independent of both the will and the pension. A separate category; (4) ESTATE PLANNING CHECKLIST: (a) Make or update your will; (b) Update expression of wishes for EVERY pension (workplace, personal, SIPP); (c) Write life insurance policies in trust; (d) Review pension nominations against current wishes — are the named nominees still alive? Still your intended recipients? Has your family situation changed?; (e) Consider April 2027 pension IHT changes — for large pension pots, professional financial advice may be needed before 2027; (5) COMMON ESTATE PLANNING ERRORS: (a) Having a will but no pension nominations — pension may not go to the intended person; (b) Having pension nominations but no will — non-pension estate passes under intestacy; (c) Old pension nominations naming an ex-spouse — they may receive benefits despite the divorce (pension trustees may still follow the nomination); (d) Treating pension and will as separate boxes that never interact — they do interact, particularly for IHT planning from 2027; (e) Ignoring death-in-service benefits — these are separate from your personal pension and need their own nomination; (6) APRIL 2027 IMPLICATIONS: once pension pots are inside the estate for IHT, estate planning that relied on pension exemption needs recalibration. Strategies to consider: lifetime withdrawals from pension to use IHT allowances; gifting pension withdrawals within PET and annual exemption rules; reviewing whether accelerating income withdrawal reduces the eventual IHT charge.