What to enter as pension value on will

pjs493

Marcon said:

pjs493 said:

Marcon said:

pjs493 said:

They may want to have a general idea in case a value of any private pension you may have needs to become part of the estate (eg you die without a named beneficiary or a spouse or children who would automatically be eligible for it where it would be received outside of your estate).

You also may need to consider your death in service benefit. If you die in service and this doesn't go to a spouse or child it becomes part of the estate and would not be a tax free lump sum (in the case of it going to a spouse for example) so would be paid out to your estate and could tip you over the IHT limits.

That's an extremely common misunderstanding, and one which is oft repeated on this forum.

The crucial point is whether or not pensions and/or DIS lump sum are paid at the discretion of the trustees or managers. If a discretionary decision is made to pay it to the estate, it remains outside the estate for the purpose of IHT.

If the payment is made under some sort of binding nomination made by the person who has died, it is potentially subject to IHT because the payment isn't being made on a discretionary basis.

If under the rules of a particular pension or DIS scheme the absence of a valid expression of wish (aka nomination) form means that the cash will definitely be paid to the estate, then it will potentially be subject to IHT, because the payment to the estate isn't a discretion; it's a requirement under the rules of that particular scheme.

There is rarely a requirement that a DIS benefit can only be paid to a surviving partner and/or children. Again, it's a case of checking the rules (which are normally set out on the expression of wish form issued by the scheme/employer) to see who the permitted classes of beneficiary are. It's common for any blood relative to be permitted; ditto step/adopted children; charities; and often there's a 'catch all' clause along the lines of 'anyone named on a valid expression of wish form'.

The above comments apply to virtually all private sector, and some public sector, schemes, but as always, it's a case of ensuring you know the rules of the scheme in question.

I was talking specifically about my knowledge of Armed Forces pensions and my recent experiences of this as the beneficiary of an Armed Forces Pension Scheme (more specifically two because my husband fell into both AFPS05 and AFPS15). The AFPS is quite specific about who the death in service benefit can be paid to tax free, otherwise it is given to the estate and would therefore fall in with any other assets. Other pension schemes may well be different but the OP specifically mentioned that they had an Armed Forces pension. 

The information I was given both by a representative of Veterans UK shortly after my husband died, and subsequently in a fact sheet I was given, was that only a spouse or dependant children (specifically those with the service person listed as a parent on the birth certificate - so no step-children or unmarried partners) could benefit from an Armed Forces pension. The beneficiaries have to be financially dependant (or co-dependant in the case of a spouse) to benefit (eg adult children don't get anything). I had to produce my original marriage certificate and original birth certificates for our children before we could be considered beneficiaries, despite my husband's employment record (JPA) listing me as his wife and naming our dependant children.

If I had predeceased my husband, the death in service benefit would have been shared between our children. They get a pension annuity until they finish formal education or reach 23 (whichever is sooner) and I get one for life. If he had died without a spouse or children, no one would receive an annuity and the death in service benefit would have been paid to his estate to be distributed accordingly (in my husband's case this would have been to his nieces and nephews as per his Will, they would not have been able to receive the death in service benefit tax free, it would have become part of his estate and distributed that way).

It's crucial to say if you are talking about one specific scheme. Don't forget that many people reading this forum won't know that's the case and will take your comments as having a more general application.

I did, but you cut my final paragraph from your quote. Here it is below:

‘You should receive an annual statement giving your projections relating to your Armed Forces pension. Figures on that may be helpful, for example the lump sum you can take upon retirement, etc. It might be worth calling Veterans UK for some advice on this. Also make sure you update JPA to name your beneficiary(ies). My husband died in service and hadn't named a beneficiary, it was straightforward and didn't cause any issues because we were married, but I know it can cause problems for unmarried SP and for those who have only been married a short time.‘

Troy_af

user1977 said:

SiliconChip said:

Unless you're likely to die imminently I don't see much point in specifying the value of anything in your Will because that value could easily change between making the Will and it being used.

I don't think the plan is to specify any values in the Will, I expect this is just some fact-finding to get an idea of what the OP's estate comprises.

The form I need to fill in asks for a value. See below (not sure if how to post images)

https://ibb.co/xf86tcY

user1977 said:

I would expect your pension administrators can tell you the capital value, don't you get at least annual updates? (I have a final salary pension from a previous job and they advise what it's worth if I wanted to transfer it).

Yes, I get an annual statement. It tells me how much I will be entitled to, both a lump some and annual amount. But I still don't understand how I am supposed to translate this into a value. I've seen other people post online what their pension pot is worth in £X.

I even emailed the will writing company and they said "For your pensions you will need to put the value of your pension pot if your pension is comprised of regular contributions rather than a guaranteed salary when you retire."

Still trying to figure out what to enter. Thanks for all the help.

Keep_pedalling

Please don’t use a will writing company use a solicitor, this is too important to use an unregulated and possibly unqualified WR.

This rather sounds like a defined benefit pension, if it is the value is nil. 

user1977

Troy_af said:

user1977 said:

I would expect your pension administrators can tell you the capital value, don't you get at least annual updates? (I have a final salary pension from a previous job and they advise what it's worth if I wanted to transfer it).

Yes, I get an annual statement. It tells me how much I will be entitled to, both a lump some and annual amount. But I still don't understand how I am supposed to translate this into a value.

But as I explained (some months ago...) it doesn't matter that much, and the value is not going into your will. It's just the will-writers wanting to know roughly how much you're worth and what's currently in your estate.

Though I wouldn't use somebody who is unable to explain that to you.