Of all the administrative tasks in pension management, keeping your expression of wishes up to date is simultaneously the most important and the most commonly neglected. The consequences of a stale or incorrect nomination can be severe: pension funds worth hundreds of thousands of pounds distributed to the wrong person, or distributed in a way that creates unnecessary tax or family conflict.
For UK expats — who may have completed nomination forms years or decades before emigrating, whose family circumstances span multiple countries, and who may have multiple pension schemes with different providers — the risk of outdated nominations is particularly acute.
The Trust Structure: Why Pensions Don't Follow Wills
UK pension funds held in a registered pension scheme are trust assets. This is not a technicality — it is fundamental to how pension death benefits work.
When you establish a SIPP, join a workplace pension, or participate in any other registered scheme, you are benefiting from a trust created by the pension provider or employer. The pension assets are held by the trustees of that trust (often the pension provider itself), not by you directly. You have beneficial rights to the pension — you can direct investments, you can draw income in retirement — but the legal ownership is with the trustees.
At your death, the trust structure determines what happens. The assets do not fall into your estate (because they are trust assets, not personal assets). They are not governed by your will (because the will has no authority over trust assets). The trustees decide who benefits, guided by the trust deed and by your expression of wishes.
This arrangement is the source of the pension's historically powerful IHT position: because the pension does not form part of your estate, it has not been subject to IHT on your death — until the Finance Act 2026 changes that position from April 2027.
How the Expression of Wishes Works in Practice
The expression of wishes form (also called the nomination of beneficiaries form or the death benefit nomination form) is your instruction to the pension trustees about who you would like to receive your pension death benefits.
The trustees are not legally bound to follow the form — their discretion is part of what maintains the trust structure and the IHT position. However, in the vast majority of straightforward cases, trustees follow the most recent expression of wishes. They exercise independent discretion when:
- The named beneficiaries have died
- Circumstances have changed significantly since the form was completed (e.g., a named spouse has become a former spouse)
- There are competing claims that the form does not anticipate
- The form is old, incomplete, or ambiguous
- The named beneficiary is legally incapable of managing money
The practical message is: a well-completed, current expression of wishes will almost certainly be followed. An outdated or ambiguous form invites trustee discretion, which may or may not produce the outcome you would have wanted.
Tax Implications of Beneficiary Choice
Before Age 75
If you die before age 75, pension death benefits can be paid to nominated beneficiaries largely free of income tax. Specifically:
- A lump sum paid from uncrystallised funds (pension not yet drawn) is generally income tax free
- A drawdown fund can be passed to a beneficiary who continues to draw from it income-tax-free
- The beneficiary inherits the pension as an "inherited drawdown" arrangement and can draw from it free of income tax (unless they are 75 or over at the time of their own withdrawal)
Before 75 death benefits are one of the most tax-efficient forms of wealth transfer available — hence the significant planning attention they have attracted and the IHT changes being made from April 2027.
From Age 75
If you die at or after age 75, the pension death benefit income tax position changes. Beneficiaries who receive death benefits — whether as a lump sum or as drawdown income — are taxed at their marginal income tax rate on the amounts received.
This means:
- A beneficiary who is a basic rate taxpayer pays 20% on inherited pension income
- A higher rate taxpayer pays 40%
- An additional rate taxpayer pays 45%
The income tax liability falls on the beneficiary, not the estate. However, the rate depends on the beneficiary's individual tax position in the year they receive the income — which can be managed by choosing the right beneficiary (one with lower marginal rates) and by the beneficiary managing the pace of withdrawals.
IHT from April 2027
From 6 April 2027, under the Finance Act 2026, unused pension funds will be brought within the scope of inheritance tax. This fundamentally changes the planning calculus for large pension pots. The income-tax-on-death-benefits position described above remains relevant, but the IHT analysis is now equally important. Specialist advice on the interaction between the new IHT regime and the choice of beneficiaries is increasingly important for those with substantial pensions.
Naming a Trust as Beneficiary
For some clients, naming a discretionary trust as the pension death benefit beneficiary — rather than individuals directly — offers advantages:
Young or vulnerable beneficiaries: A minor child cannot receive a pension death benefit directly. If you name a child under 18 as beneficiary, the pension trustees must make alternative arrangements (typically paying to a parent or guardian). Naming a trust that holds the funds for the child until they reach an appropriate age (18, 21, or 25) gives better protection.
Beneficiaries with financial difficulty: If a beneficiary has creditor problems or is in the process of a divorce settlement, direct payment of a large pension lump sum to them may expose the funds to claims. Funds paid to a discretionary trust may have more protection in some circumstances.
Multiple generations: A trust can accommodate a class of beneficiaries — "my children and grandchildren in equal shares" — without naming every individual. This accommodates future family developments (children not yet born, grandchildren yet to be had) that fixed individual nominations cannot.
Control over timing: A trust allows the trustees to manage the pace of distributions to beneficiaries, which can assist with income tax planning over time.
The main disadvantage of naming a trust is complexity and cost: the trust must be properly established and administered, and tax advice on the trust structure is required to ensure it achieves the intended outcome. The income tax treatment for a beneficiary receiving income via a discretionary trust rather than directly as inherited drawdown may differ, and this should be modelled before adopting this structure.
Updating Nominations After Life Events
The life events that should trigger an immediate review and update of expression of wishes forms include:
Divorce or separation: Most critically. Your former spouse remains the named beneficiary until you change the form. Pension providers do not automatically remove former spouses on divorce. This must be done actively by you.
New relationship or remarriage: Name a new partner, particularly if they are financially dependent on you, as soon as the relationship is established to the level you would wish them to benefit.
Birth of a child or grandchild: Add new family members to nominations where appropriate. For young children, consider whether a trust structure is preferable to a direct nomination.
Death of a named beneficiary: If a named beneficiary predeceases you and you have not updated the form, the trustees must exercise discretion on the share intended for that person. Make sure the form is updated to reflect the revised position.
Change in a beneficiary's circumstances: A beneficiary who has become wealthy, who has developed financial difficulties, or whose relationship to you has materially changed may no longer be the right primary beneficiary.
Major change in your own wishes: Estate planning evolves. What you wanted at age 40 may not reflect what you want at age 60. Review nominations as part of your annual financial review.
Practical Steps for Expats
For UK nationals living abroad with multiple pension schemes, keeping nominations current requires active effort:
Compile a list of all your pension schemes — workplace pensions from every employer, personal pensions, SIPPs, and any DB schemes.
Contact each scheme to confirm the current expression of wishes on their records and request a copy of the current form if you have not updated it recently.
Check the address they hold for you — as an expat, it is common for former workplace pension schemes to hold a UK address that is years out of date. Ensure they can reach you.
Complete updated forms for every scheme where the current nomination does not reflect your current wishes.
Review annually as part of your overall financial and estate planning review.
Coordinate with your will and other estate planning — while the pension does not follow the will, your overall estate planning should consider what the pension is doing and who is receiving what, to avoid unintended concentrations or gaps.
How Global Investments can help
Ensuring pension death benefit nominations are correct and current is one of the most straightforward and impactful areas of pension administration — and one where Global Investments helps clients internationally as part of ongoing pension planning relationships.
We can assist you in identifying all your pension schemes, reviewing the current nomination positions, and implementing updates. Where more complex arrangements — trusts, cross-border family structures, or significant pensions affected by the April 2027 IHT changes — are involved, we can coordinate with specialist legal and tax advisers.
Contact our pensions advisory team for a pension nomination review.
Frequently Asked Questions
Does my pension follow my will when I die?
No. Pension funds held in a UK registered pension scheme are trust assets — they are held by the scheme trustees, not owned directly by you. When you die, the trustees decide who receives the death benefits. Your will has no legal authority over pension assets. The trustees are guided by your expression of wishes (nomination form) but are not legally bound by it. This is both the great advantage and the great responsibility of pension death benefits: the advantage is that they pass outside the estate and (until April 2027) outside IHT; the responsibility is that you must ensure your nomination is current and reflects your actual wishes.
Why are trustees not legally bound by the expression of wishes?
The trust structure is intentional. By giving trustees discretion over who receives death benefits — rather than making the nominations legally binding — the pension assets remain outside the estate for IHT purposes. If your nomination were legally binding (like a will provision), the pension fund would arguably form part of your estate and become subject to IHT. The discretionary trust structure keeps the assets outside the estate. In practice, trustees follow the expression of wishes in the vast majority of cases where the circumstances are straightforward. They exercise independent discretion primarily where there is ambiguity, competing claims, or changed circumstances.
What are the tax implications of leaving pension death benefits to different people?
The tax treatment depends on whether you die before or after age 75, and on the nature of the death benefit. If you die before 75: death benefits can generally be paid to named beneficiaries free of income tax (as a lump sum or as drawdown income). If you die at or after 75: death benefits paid to beneficiaries are taxed as income in their hands at their marginal rate in the year of receipt. In both cases, pension death benefits are (currently) outside the IHT estate — though the Finance Act 2026 changes this from April 2027. The recipient's tax position matters: a basic rate taxpayer beneficiary receiving income from an inherited drawdown fund pays 20%; an additional rate taxpayer pays 45%.
Can I name a trust as the beneficiary of my pension?
Yes, and for some clients — particularly those with young children, beneficiaries with vulnerable circumstances, or complex family arrangements — naming a trust is preferable to naming individuals directly. The pension trustees pay the death benefit to the trust, and the trust then distributes to the ultimate beneficiaries under the trust deed. This can provide: protection for young or vulnerable beneficiaries; control over when and how the money is distributed; potential asset protection from beneficiary creditors; and the ability to accommodate changing beneficiary circumstances. However, trust structures add complexity and cost, and the tax treatment requires careful consideration — in particular, pension funds paid to a discretionary trust rather than to an individual drawdown may lose some tax advantages.
How often should I update my expression of wishes?
You should review and, if necessary, update your expression of wishes after every significant life event: marriage or civil partnership, separation or divorce, birth of a child or grandchild, death of a named beneficiary, significant change in a beneficiary's financial circumstances, and any change in your own family circumstances. As a general discipline, review all nomination forms annually alongside your annual pension review. For expats with family members in multiple countries, ensure the nomination is clear about which individuals are intended (full names, dates of birth, relationships) to avoid ambiguity for trustees who may not know your family.
This guide is for general information only and does not constitute financial, legal or tax advice. Pension rules, tax rates and programme details change; verify current requirements with a qualified and FCA-regulated pensions adviser before acting. Pension transfers involving defined benefits over £30,000 require regulated advice.