FINANCE
PICTURE : CHRIS BOOTH
Advice - Financial adviser Emma Cherrington ( left ) and Helen Milburn of Jacksons Law .
WHERE THERE ’ S A WILL …
The importance of having a pension will
What is a pension will and why do you need one ? Recent research from pensions provider Canada Life reveals that three quarters of UK adults have never completed a “ pension will ”. This is done via an expression of wish form , which nominates beneficiaries in the event of the passing of the person with the pension benefits .
“ This figure really surprises me as it ’ s such an important , yet simple thing to do ,” says Helen Milburn , private client associate solicitor at Jacksons Law
“ Although I ’ m not a huge fan of the term ‘ pensions will ’, completing one as part of an expression of wishes form is as crucial as making a will to nominate who receives your pension benefits on death . These benefits can be hugely valuable and are sometimes an overlooked part of someone ’ s estate .
“ Unlike the strict legal formalities involved in creating a will , a pension will is in the form of an expression of wishes and it is usually the case of completing and signing a standardised , yet simple form provided by your individual pension provider to nominate your chosen beneficiaries .
“ It goes without saying it is imperative for planning for the future to make a will to cover all your estate assets and a pension will to cover your pension benefits .”
The Canada Life research also found that in the crucial “ 55 and over ” age group , 71 per cent of people say they have not completed a pension will .
An up-to-date expression of wish form is held by your pension provider , and in the unfortunate event of your death , it will help to distribute the pension quickly and efficiently - considering your views . Failure to complete an expression of wish form could result in delays to any beneficiaries receiving the pension , or worse - the possibility of unintended beneficiaries receiving the pension benefits .
Independent financial adviser Emma Cherrington says : “ A vital part of our financial advice service is to ensure that clients have not only completed an expression of wish form but , as Helen says , ensuring it is up to date . It ’ s very important for the client to ensure their pension goes to who they want , but also to ensure any extra tax isn ’ t paid unnecessarily .”
Pension benefits do not usually form part of the deceased ’ s estate for inheritance tax purposes and chosen beneficiaries can access them tax free if the deceased passed away before age 75 , or if over 75 , at their own marginal income tax rate . However , this depends on the benefits being designated within two years of death . If this is not the case , the pension can go back into the estate and be subject to inheritance tax . This shows the real importance of the expression of wish form .
Emma adds : “ If you are unsure if you have completed this form , or you aren ’ t sure if it ’ s up to date , you can contact your pension provider or your financial adviser and they will confirm this for you . To add a beneficiary or make amendments is a very simple process and the person being added or removed will not be made aware of this .
“ It is crucial to remember that pensions are not linked , so you must make this expression of wish on every pension you have , whether it is one you have arranged yourself or your employer has done on your behalf .”
> The Financial Conduct Authority does not regulate taxation advice . The content of this article is for information only and must not be considered as financial advice . We always recommend that you seek independent financial advice before making any financial decisions . Levels , bases of and reliefs from taxation may be subject to change .
activefinancialplanners . co . uk # TheClearAdvantage
132 | Tees Business