HERE'S WHAT REALLY HAPPENS TO YOUR PENSION WHEN YOU DIE

You might not often think about your pension until it’s time to retire, as the money goes straight into your pot without you having to do much.

But you never know what life has in store. You could, for example, die before you’re able to enjoy the contributions you made throughout your working life.

In the case of death, the pension pot doesn’t just disappear though, nor does it automatically go to your next of kin.

As such, you need to take action to ensure it goes to the right person.

Speaking on This Morning, Money Saving Expert founder Martin Lewis previously explained that you can’t bequeath the sum to a loved one in your will.

Instead, you have to nominate a trustee to handle your estate, then create a document explaining what you want to happen to your pension – and you might want to do that now, so your contributions aren’t just left in the lurch.

Martin said: ‘Pensions don’t generally go in your will, it is the trustees who will decide who the money goes to.

‘An expression of wishes nomination form tells the trustees who you would like it to go to. It can’t dictate, but it is a very strong indication.

‘My big tip, if you haven’t done that recently, go and make sure it is up to date because you do not want to leave your pension to your ex.’

The finance guru said the process of filling out an expressions of wishes nomination form is easy, and templates are usually available online through your pension provider. But to make it even easier, here’s everything you need to know.

What is an ‘expression of wish’ form?

You can’t leave pension savings in your will, so if you die before taking your private and/or company pension, the provider, or nominated trustees, decide what to do with it.

An ‘expression of wish and nomination’ form, as it’s officially called, tells your pension provider who should receive your pension savings (the ‘beneficiaries’) if you die before you retire. And although it’s not legally binding, your wishes will be taken into account when deciding who to pay out to.

How do I fill out an expression of wish form?

Each pension provider will have its own expression of wish form, and you’ll normally be asked to complete one as soon as you sign up to the scheme – while it’s not mandatory, it’s recommended.

An expression of wish form will generally ask you the following:

Your name, national insurance number and pension account number.
The name, address, date of birth and relationship of the beneficiaries you choose. This can be just one person, or as many as you like.
The percentage of savings you’d like each beneficiary to have. You can choose different percentages for different people, but the total for all beneficiaries must add up to 100%.

Who can I nominate as a beneficiary?

This depends on what kind of pension you have.

Money-purchase pensions (also known as ‘defined-contribution’ pensions). Anyone can be named – this could be a partner, relative, child, friend or even an acquaintance. You can also usually nominate charities, if you wish to.
Final salary schemes (also known as ‘defined-benefit’ pensions). Here. you can’t just nominate anyone, but you can nominate people in accordance with the scheme rules. These vary between providers, so you’ll need to check with yours.

Important: If you nominate someone under age 18, a pension provider will usually only be able to pay out to them if a trust or other suitable arrangement has been set up for them.

Does my employer pay my pensions?

Auto-enrolment into pensions now requires all employers to offer staff a pension, to automatically enroll them in the scheme and, crucially, to contribute on their behalf.

From April 6, 2019, the minimum employer contribution level increased to 3%.

Under auto-enrolment, total contributions must be at least 8%, (your and your employer’s combined contributions should reach this) so if the employer only puts in 3%, the employee has to contribute 5%.

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How much money does my employer put into my pension?

Contributions are based on a band of what are called ‘qualifying earnings’. This is any pre-tax employment income between £6,240 and £50,270 (in 2024/25).

So if you earn £25,000, you’ll get at least £1,501 automatically pumped into your workplace pension (calculated as £25,000 – £6,240 x 8%) including your own contribution and those from your employer.

If you earn £50,270, the total will be £3,522 (calculated as (£50,270 – £6,240 x 8%). However, if you earn say £55,000, the 8% is still based only on earnings between £6,240 and £50,270, so the total minimum contribution remains £3,522.

You can say ‘no’ to auto-enrolment if you don’t want to join. But it’s an opt-out rather than an opt-in scheme, so if you do nothing, you’ll be opted in.

How much money should I put into my pension?

The basic advice with pensions, according to the Money Saving Expert site, is to put in is as much as possible, as early as possible. There’s a rule of thumb for what to contribute for a comfortable retirement.