How to stop your pension benefits going to the wrong person
Six in ten risk pension benefits going to the wrong person, finds HL report
- Only 38% of people said they had kept expression of wish forms for all their pensions up to date.
- Over a quarter (26%) said they hadn’t, 13% were unsure.
- A quarter (24%) said they didn’t know what an expression of wish form was.
- Expression of wish forms allow you to name who receives your pension death benefits when you die.
- If you don’t update them when your personal circumstances change you risk your death benefits going to someone you no longer wish to have them – such as an ex-partner.
Source: Research of 2,000 people carried out by Opinium on behalf of HL in September 2022.
Not every marriage ends in divorce, but could you imagine if, at the time of your death, your pension benefits went to your ex-partner and his or her second family instead of your children or grandchildren? Or someone you fell out with?
Well, believe it, because it is happening 6 out of ten times, according to a new study by Hargreaves Lansdown. Mainly, because people forget to update or put off filling out what is called an expression of wish form.
“Updating expression of wish forms is easy to put off but doing so risks causing real problems for your loved ones in the event of your death,” says Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown.
Not updating these forms when your personal circumstances change means your pensions risk being paid out to someone you don’t intend. One example could be pension benefits going to an ex-partner when you may well have settled down and even had a family with someone else. Alternatively, they could go to a family member who you have since fallen out with.Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown
Morrissey reminds us that we move jobs several times during our career and auto-enrolment means we likely will have a pension in every job, so care needs to be taken that these forms are updated to save your loved ones from a nasty shock and potential financial difficulties.
Umbrella company workers can end up moving pensions with every project, depending on their recruitment agency’s preferred umbrella company supplier. They especially should ensure their expression of wish form related to their pension benefits is updated.
What can go wrong?
Pension scheme administrators and trustees can make enquiries about whether the person named on these forms continues to be the right person, but if they can’t track down your loved ones then this can prove difficult.
“They will also have different responsibilities depending on how the pension is set up,” says Morrissey.
“If it is set up under discretion, then administrators and trustees can amend the beneficiaries if they find the ones on the form are outdated. However, if the pension is set up under direction then they have no such discretion, and the benefits must be paid out to the person named on the form. Refreshing these forms whenever your circumstances change is key to making sure your wishes are respected and your loved ones are protected in the event of your death.”