Individuals cannot leave their pension in a will, as pensions are not treated as part of an estate in the same way as other assets. This means that if a pension is mentioned in a will, the provider is not legally obliged to follow the request.
Instead, most people need to complete an ‘expression of wish’ or ‘nomination of beneficiary’ form directly with their pension provider to name who they wish to inherit their remaining pension wealth. While not legally binding, it is considered good practice to also name beneficiaries in a will, as providers may take this into account.
Even though pensions will be treated as part of an estate for inheritance tax purposes from April 2027, the rule preventing them from being left in a will will not change. Sarah Pennells, a consumer finance specialist at Royal London, highlighted the importance of keeping these nomination forms up to date, especially after significant life events, to ensure they reflect current wishes.
For those with an annuity, the rules for passing on funds after death vary depending on the type of annuity chosen. A joint-life annuity, for example, may continue paying income to a spouse or partner, while a single-life annuity's income typically stops unless it includes specific features like a guarantee period.