Nominated beneficiary or Will which has precedence?

UKSBD

I have an auto enrollment pension with NEST


In the NEST system you can set nominated beneficiaries if you die.


What happens if your nominated beneficiaries are different to your Will? Which takes precedence?

Linton

You do not own your pension and so it is not part of your estate, it is merely held in trust for your benefit. Your will only specifies what happens to your estate. So your nominated beneficiary should take precendence. The nominated beneficiary isnt binding on the pension trustees so they could ignore it if they thought your choice inappropriate. However, this is unlikely to happen.

PensionTech

I would add that where a discretionary decision has to be made about the distribution of death benefits, trustees will take into account information from all sources. They will not assume that the expression of wish form is the ultimate authority on where the money should go. Where a will exists, it is customary for trustees to request a copy so that they can ensure that their decision is well-informed.

If, for instance, the will was vastly more recent than the expression of wish form (on which you had nominated a beneficiary), they might want to consider whether any discrepancies between the will and the expression of wish form could indicate a change in your personal circumstances (e.g. breaking up with a long-term partner and rewriting your will for the benefit of your children instead). If they thought this was likely (particularly if they have any other evidence to support a change in circumstances), it could be used as a reason why they might not follow the expression of wish form - although, as Linton says, such cases are rare.

UKSBD

Thanks both.


Should this sort of information not be made a lot clearer on places like NEST?

PensionTech

I see your point:

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/members/contents/nominate-a-beneficiary.html

Your retirement pot is your property. If you die before you take it, it’s up to you who gets it. All you need to do is let us know and we’ll make sure they get it if you die.

In general this is not how trusts work. It may be how it ends up in the majority of cases but, as we have both pointed out above, there is usually a small chance that the money can be given to someone other than your nominated beneficiary.

I am talking about trust law in general, as I understand it. It is possible that NEST operates in a different way and guarantees that any death benefits will go solely to your nominated beneficiary - but I would have thought that this would create IHT issues (which is the reason why death benefits are held on trust in the first place).

I assume you are asking this question because you intend to nominate someone other than the beneficiaries of your will. This will almost certainly be fine, unless there's any reason why it would look completely bizarre to any rational onlooker. The best thing you can do to ensure that your wishes are followed is to keep your expression of wish form up-to-date.

UKSBD

PensionTech wrote: »

I assume you are asking this question because you intend to nominate someone other than the beneficiaries of your will. This will almost certainly be fine, unless there's any reason why it would look completely bizarre to any rational onlooker. The best thing you can do to ensure that your wishes are followed is to keep your expression of wish form up-to-date.

To be honest I have nothing in there and doubt I ever will.


I just set it up because I have my own business, my staging date is in August and I added myself as an employee to get see how the system works.


It was just reading the section about beneficiaries that got me wondering.