Two fifths (40%) of over-60s have not completed an expression of wish form instructing who they would like to receive their pension when they die, new research from Hargreaves Lansdown has shown.
The research found the issue was even greater among younger generations, with just one in 10 people under 30 having completed an EOW.
On average, men (40%) are slightly more likely than women (34%) to have placed an instruction.
Clare Stinton, head of workplace savings analysis at Hargreaves Lansdown, called it a “risky oversight”, warning that failing to have an EOW in place could lead to unnecessary delays.
“First and foremost, not updating your expression of wish form after key life events, such as divorce, may lead to unnecessary delays in loved ones receiving money when you die. It could even mean an ex-partner gets the benefit rather than a current one. This can lead to all kinds of financial issues while the situation gets sorted out.
“The other issue is the Government’s decision to make unspent defined contribution pensions subject to inheritance tax from April 2027. In this case, completing an expression of wish is a small task that could make a big difference and potentially save your family thousands of pounds,” she said.
While most people will choose to nominate their spouse or civil partner as the main beneficiary, with transfers between spouses usually exempt from inheritance tax, the proposed changes mean that passing away after 2027 could land younger generations with a potentially hefty tax bill if they are named on the EOW, the investment platform said.
Those in poor health and unlikely to live to April 2027 can take advantage of the current more generous rules and pass money to children or grandchildren. Should they live beyond the rule change, the instruction can be changed.
Stinton added: “It’s all about making the right choice for your situation and revisiting it over time. An outdated nomination risks the money ending up in the wrong hands. Marriage, divorce, new loved ones, or changes to your health, as well as new tax rules, are all reasons to review your nomination.
“This is more than tick box life admin. Failing to complete or update your nomination could leave your loved ones facing delays in accessing funds, and with the proposed new rules, possibly also land them with a tax bill that could have been avoided.”
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