Pension Inheritance

RetiredandHappy · 10 October 2017 at 10:17AM

I have both a SIPP and a personal pension. Talking to an IFA recently, he explained that if I set the beneficiaries correctly, then my wife could inherit my pension funds if I die first and that potentially, my children could inherit that same money from her in their turn assuming she did not spend it first. So far so good, this is confirmed by many posts on here.

He implied that I had to word my Statement of Wishes correctly, giving lets say 94% of the fund to my wife and 2% to each of my 3 children so that they were mentioned in my Statement. In some way, this was supposed to then allow my wife after she had inherited the 94% (or maybe the whole 100%?) to modify the percentages to nominate the children as her beneficiaries. He implied that if the children were not mentioned in my Statement, then she could not modify the percentages in their favour later on.

Does this make sense? Is it correct that my statement needs to be carefully worded? Can anybody confirm this or point me to an authoritative source?

The IFA has not followed up so I am not bothered about him and I would like to know more before I contact the pension company help desks.

System · 10 October 2017 at 12:11PM

Suffolk Life, for example, have recently introduced a new Letter of Wishes form to take account of the new pension freedoms. Customers were finding that they had to keep writing more and more complicated letters to take account of ever-changing legislation.
Now their standard letter says something like "I appoint my wife as my beneficiary and she can do what she likes".
But you can still adjust the wording to suit your requirements.

You have to remember that it is not binding on the pension trustees - it is a discretionary trust, and they can do what they like. Obviously they try and follow your wishes, but potentially these could be challenged if a potential beneficiary felt agrieved.
Likewise if you omitted to forsee future developments they can still accommodate that if fair and broadly in accordance with your wishes.

AlanP_2 · 10 October 2017 at 12:53PM

I thought the pension was inherited by whoever you nominated (subject to Trustee's discretion and oversight) so unlikely to be a problem for a surviving spouse I would have thought.

After that is down to the spouse's wishes surely as it is their asset?

dunstonh · 10 October 2017 at 1:00PM

There is no longer a requirement to state name and percentage by itself anymore. You can give a description of what you want to happen in various scenarios. Not all providers yet support the new style.

Pension Inheritance

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