Recent press coverage has highlighted a problem many people don’t realise they have: your pension does not pass under your Will, and unless your paperwork is up to date, it may end up in entirely the wrong hands. A recent report in The Mirror warns that many savers inadvertently leave their pension benefits to an ex-spouse or partner simply because they never updated their “expression of wishes” form with their pension provider.
This is not a one‑off anomaly and is more common than you might think. Because most pensions sit outside your estate and are held under a trust structure, the pension provider decides who receives the funds on the holder’s death.
Typical pension schemes require you to submit an expression of wishes or nomination form, and providers usually follow this when deciding where the funds should go. If that form is outdated; or worse, never completed, your pension can legally pass to someone you would never have wanted.
What this means for your Will
Effective pensions and estate planning requires both your will and pension nominations to work together. Martin Lewis’s warning highlights the fact that updating your will is not enough to determine who inherits your pension.
This is a problem especially relevant for:
- Those who have divorced or separated;
- People who have remarried or are in second relationships; and
- Anyone who has not reviewed their pension arrangements for a long time.
This means that relationships that are long‑ended can suddenly re‑emerge in the eyes of pension providers if your wishes are out of date and name an ex‑spouse or partner.
Bigger changes are coming: pensions will soon be pulled into the IHT net
Historically, pensions have been one of the most inheritance‑tax‑efficient assets a person could hold. In most cases, unused pension funds have not been included in an individual’s estate for IHT purposes. That is soon to change.
The Government has confirmed that from 6 April 2027, most unused pension funds and death benefits will be included within a deceased person’s estate for inheritance tax purposes.
The stated aim of this controversial legislation is to prevent pensions being used as IHT‑free wealth‑transfer vehicles and return them to being a means to provide retirement income. Clarification published in 2025 confirmed that this change will affect virtually all registered pension schemes. This is expected to make more than 10,000 estates chargeable to IHT in the first year alone.
What will be caught by the new rules?
Under the upcoming regime, the following will generally fall within a person’s taxable estate:
- Uncrystallised defined contribution (DC) pension pots;
- Income drawdown funds remaining at death;
- Most lump‑sum death benefits.
Death‑in‑service benefits remain excluded—one of the few carve‑outs from the otherwise sweeping reform.
Why this matters for pensions and estate planning
For years, advisers have encouraged clients to draw on other assets first and leave pension wealth untouched, preserving it as an IHT‑efficient legacy. That strategy will soon no longer apply.
From April 2027, pension funds will largely be treated like any other estate asset, taxed at up to 40% above the available nil‑rate bands.
This is a fundamental shift and will require all individuals with significant pension assets to revisit their long‑term tax and succession planning.
What should you do now?
- Immediately review your expression of wishes with your pension provider.
If you have not recently reviewed your pension nomination in the past two years; or you have gone through a major life event such as marriage, divorce, separation, children or bereavement, this should be a priority.
- Review your will, even though it doesn’t cover pensions.
Your will must still work in tandem with your pension nominations. If the two contradict each other, this can lead to tax inefficiencies, confusion and even disputes.
- Reassess your estate planning in view of the 2027 IHT reforms.
The inclusion of pensions in the IHT estate from April 2027 may alter the optimal order in which you draw retirement income and hold long‑term assets.
- Seek professional advice early.
Every individual’s personal and financial circumstances are different. Proper planning now can help you avoid unexpected tax liabilities and ensure that your wealth passes as you intend.
How we can help
As specialist private client and estate‑planning solicitors, we regularly advise clients on:
- Pension nominations and coordinating them with your will;
- Strategies to mitigate future IHT exposure; and
- Preparing updated wills and letters of wishes.
If you would like personalised guidance to make sure your pension and wider estate plan are fully aligned—and protected—our team is here to help.
Get In Touch
Paul Baker is an Associate Solicitor in our Wills & Probate team.
If you’d like to discuss more about pensions and estate planning, please contact Paul or another member of the team on 0330 111 3131 or via our contact form.
