We know no-one wants to think about what happens to your pension when you die. But it is important. You might even be surprised at the peace of mind you can get from doing something about it.
Did you know you can usually pass your pension savings on to family members or friends? We say ‘usually’ because some pensions have rules that say who the money goes to. So you need to understand what kind of pensions you’ve got.
But if you simply want to know how passing on your pension works in our Scheme, go straight to Who decides where the money goes in NOW: Pensions?
Understanding different kinds of pension
If you’ve got a defined contribution (DC) pension, you build up pension savings you can use for income when you retire. Your pension savings build up based on:
- contributions from you (and your workplace, if it’s a workplace pension), and
- returns on your investments.
Our Scheme is a workplace DC pension.
With a DC pension, you can usually ask for your pension savings to go to particular people or organisations when you die.
If you’ve got a defined benefit (DB) pension, you build up an amount of pension each year based on:
- part of your salary, and
- the number of years you build up the pension.
DB pensions are rare nowadays. They’re usually older workplace schemes or public sector pensions.
Many DB pensions’ rules say what happens to the money when you die. It’s important to check with your DB pension provider. With some DB pensions, your husband, wife or partner automatically gets a pension, although this is usually less than your pension was. Not all DB pensions do this, so you’ll need to check your own pension scheme’s rules.
What about personal pensions?
Personal pensions are DC pensions. You’ll need to ask your pension provider how you name people to pass your pension on to – whether you have to fill in a form, or whether you can do it online.
Can I pass my pension on to a child?
Yes – you can name a child as the person you want to pass the pension on to. If you don’t want them to get at the money until they’re older, you can put it into a trust. This means you appoint people known as trustees to look after the money.
You’ll need to get expert help from a solicitor or financial adviser if you’re thinking of setting up a trust. They can be complicated, especially for tax. Check out the guide to trusts and taxes on the government website for more about this.
We can’t help you with this or set up a trust for you, but you can tell us who you want the money to go to.
What about State Pension when someone dies?
Usually your State Pension stops being paid when you die. But if you leave a wife, husband or civil partner they may be able to get a pension based on your State Pension. You may have seen people online asking things like ‘how long is State Pension paid after death?’ or ‘are widows entitled to husband’s State Pension?’
The rules are complicated. It depends on how much National Insurance you and your partner had built up. The government website has a calculator you can use to check whether you can inherit any of your partner’s State Pension.
You can’t pass your State Pension on to your children.
Who decides where the money goes in NOW: Pensions?
The NOW: Pensions Scheme Trustee has the final say over where the money goes. It may seem odd that you don’t have the final say. But this means your pension savings can be paid without inheritance tax, as they aren’t part of your estate – the money and belongings you leave when you die.
If you’ve got other pensions, check who’s responsible for deciding where the money goes. It could be the trustees or administrators, depending on what kind of pension it is.
It’s really important to tell your pension trustees or administrators who you want the money to go to. If you don’t, they may need to ask the people you’ve left behind – which could be distressing. So it’s best to have clear, up-to-date instructions about where you want your pension savings to go. Your trustees or administrators don’t have to follow your instructions, but they usually do. If you leave a will, they’ll also take this into account.
Who can I pass my NOW: Pensions savings on to?
You can name anyone you want to pass your pension savings on to. This could be your husband, wife or partner, your children or other dependants.
But the people you name to get your pension don’t have to be related to you. For example, if you don’t have a partner or any dependants, you can pass your pension savings on to friends. It doesn’t even have to be a person. You can pass money on to charities and organisations. Or, you can name a mixture of people and organisations.
Remember, the NOW: Pensions Trustee has the final say over where the money goes. But the Trustee will take your wishes into account.
How to pass your NOW: Pensions savings on
If you’ve got pension savings in our Scheme you can download an expression of wish form from our website. Once you’ve filled in the form you can scan and email it to: firstname.lastname@example.org. Or, post it to NOW: Pensions, Post Handling Centre, Maclaren House, Talbot Road, Stretford, Manchester, M32 0FP.
If you can’t get on the website or don’t have access to a printer, call 0330 100 3334 (9am to 5pm, Monday to Friday) and ask for an expression of wish form.
If you’ve got other pensions, you’ll need to ask each pension provider for an expression of wish form (it may also be called a nomination form). Or, you might be able to do it online, depending on what your other providers offer.
It doesn’t matter whether you’re currently paying in to the pension or not. There’s still money to pass on.
Do it today
The best time to fill in an expression of wish form is today – even if you’ve filled one in before. It’s quick and easy. And you’ll have the peace of mind of knowing you’ve done something good for the people who matter to you.