by Carl Melvin, Affluent Financial Planning Ltd
Pension Death Benefits - Nominee or Successor?
What happens to your pension fund when you die? What choices do your beneficiaries have?
Following on from last month’s blog on pension death benefits, the newly introduced Pension Freedoms created a new class of potential beneficiary – the Successor. However, if your pension plan provider does not offer the flexibility of beneficiary drawdown to all classes of beneficiary, or you do not update your death benefit nomination, your beneficiaries could be denied the full range of options available.
A successor is someone not nominated directly by the pension plan holder but a person who could potentially become a beneficiary of the pension on death. Let us look at examples;
- You do not make a death benefit nomination and you are survived by your spouse and brother. The spouse is keen for some benefit to be paid to the brother. The scheme cannot offer the brother beneficiary drawdown because he was not nominated by the plan holder, and the scheme cannot nominate him because there is a dependant.
- You nominate your spouse and subsequently divorce. You are survived by your ex-spouse and adult children. Your adult children cannot access beneficiary drawdown because they were not nominated by you, and the scheme cannot nominate them because your ex-spouse has been nominated.
So, the key is to make sure that beneficiaries have the maximum flexibility allowed under the Pension Freedoms. Check that your plan provider can offer your potential beneficiaries the full range of options on your death.
This information is not financial advice. If you require advice you should consult a professional adviser. The first meeting is normally free and there is no obligation. Carl Melvin is a regulated pension transfer specialist.