Published: 25/07/2024 By Claire Matthews
What is an Expression of Wish form?When a client passes away with pension benefits, the administrators of that pension need to decide who receives the benefits. An Expression of Wish form allows the client to nominate an individual, charity, or trust to receive the pension benefits and in what proportions. While the pension administrators are not obliged to follow the Expression of Wish form, they should take it into account.
What happens if you do not complete an Expression of Wish form?
If the client has not completed an Expression of Wish, or the form they have completed is not valid, then the administrators will typically prioritise the following dependents:
- The client’s spouse or civil partner
- Children under the age of 23
- Anyone who was financially, physically, or mentally dependent on the client
Completing an Expression of Wish form
Most pension providers will have a form which will allow you to make an Expression of Wishes. Some providers will accept a signed letter as long as the letter contains all the necessary information and satisfies the relevant pension legislation and scheme rules.
The client should name all beneficiaries and the proportion of the benefit they would like the administrators to consider when paying pension benefits. The Expression of Wish should be regularly reviewed and updated.
Benefits of having an Expression of Wish form
At tba Wealth Management, we always recommend our clients with regularly review their Expression of Wish forms to ensure that their pension benefits are left to those intended.
A valid Expression of Wish form can have some inheritance tax planning advantages. Pension funds in drawdown can pass to beneficiaries, either as an income or lump sum, free of tax if the client dies before the age of 75. This means that families may be able to use their pension funds as vehicles for passing wealth down through the generations in a tax-efficient manner. The beneficiaries have the options of keeping the money inside the pension arrangement or taking an income as they wish. Any pension funds remaining on the beneficiary’s death can be passed on again to future generations.
Disclaimer
This article does not constitute advice and only aims to provide basic information. If you would like to receive advice, you should contact our office on 020 8661 7878 and arrange a consultation with one of our financial advisers. All initial meetings are at our cost, so you can be safe in the knowledge that you will not receive an unexpected bill for our time.
Any reference to legislation and tax is based on tba Wealth Management’s understanding of United Kingdom law and HM Revenue & Customs practice at the date of production. These may be subject to change in the future. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances.