Under 40? Here’s why it’s still important to tell us who you’d want your pension to go to

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Kirsty Kerr

March 18, 2024

3 mins read

Find out why thinking about who you’d want to pass your pension to matters, even when you’re young – and what happens when you don’t.

When you’re young and starting out in your career, if we’re being honest, you’re probably not paying too much attention to your pension, let alone thinking about who you might want to pass it on to. In fact, when we looked at one of our pension products, we found that only 13% of our customers under the age of 40 had nominated a pension beneficiary – that’s who you want your pension to go to if you were to die. But your pension could actually be one of the most valuable things you own at this age, meaning it may be one of the biggest assets you could pass on. So it’s worth making it known who you’d want it to go to.

The usual scenario

Here’s what we often see with our younger customers. Normally, they’ll start off with a workplace pension after being automatically enrolled into one with their employer. At the time, they might be unmarried, with no kids and no long-term partner. So, what they do is nominate their parents, if anyone.

That’s fine, but the problem comes in if, say, 10-20 years later, your circumstances or wishes have changed and you haven’t told us. Maybe by that point you’re married or have children or other dependants, and it just makes more sense for any pension savings to be passed to them.

In this case, if you were to die, it’s complicated for us to go against your original wishes, even if that’s what you’d have really wanted. We don’t legally have to pass your pension to the person you’ve nominated (for this exact reason) but we wouldn’t go against it without good reason either.

Of course, we’ll speak to your family and anyone else close to you to try and get a better picture of your circumstances when you died. We’ll ask them to help us gather the information we need to make the decision you’d have wanted. But there’s always a chance your real wishes won’t be met.

What happens when you don’t have a beneficiary

Even trickier than this is when there’s no beneficiary nominated at all. In this case, we’ll need to start from scratch, trying to work out who to speak to and what you might have wanted. It’s a guessing game, and we’ll need to rely on the people close to you to fill in the blanks. 

Rest assured; we take this very seriously. And we’ll do our best to get a full picture of your life and do the right thing. But if you want us to consider someone, you need to tell us.

Can’t I just make a will?

Only 44% of UK adults have made a will. If you do have one already, that’s great news. However, your pension savings aren’t normally considered as part of your estate, so they aren’t covered by your will. This also means they aren’t subject to inheritance tax. 

If you die before age 75, your beneficiaries normally receive the money free of income tax. If you die after age 75, they’ll have to pay income tax at their highest income tax rate. This makes your pension one of the most tax-efficient ways to pass money to your loved ones.

How to nominate a beneficiary

It’s probably quicker and easier than you might think. Usually, your beneficiaries can be updated online, either through our app or online dashboard. Or, if you’d prefer, you can get in touch with us and we’ll send you a paper form to fill out. Just make sure you regularly check on your choice and update their names or contact details if things have changed.

So tick ‘update my pension beneficiaries’ off your to-do list today and feel satisfied that your pension savings are in good hands! 

The information here is based on our understanding in March 2024 and shouldn't be taken as financial advice.

A pension is an investment. Its value can go down as well as up and you could get back less than what was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.