Pension death-benefit nominations: why the expression of wish matters

A nomination, or “expression of wish”, tells the scheme administrator who a member would like to receive their pension on death. It looks like a formality. It is not — the form shapes both the tax position and the options open to the people left behind.

Discretion, and why it matters

Most modern pensions pay death benefits at the scheme administrator’s discretion, guided by the member’s nomination but not bound by it. That discretion is what has historically kept the pension outside the member’s estate for inheritance tax — the member never had a right to direct the money, so it was not theirs to give away (PTM071000). HMRC's Inheritance Tax Manual states the inheritance-tax consequence: such discretionary lump sum death benefits are not part of the estate (IHTM17051; IHTM17052). For deaths on or after 6 April 2027 that estate treatment changes, as set out in pensions and inheritance tax from April 2027; the discretionary mechanics, though, are unchanged.

What a nomination unlocks: drawdown, not just a lump sum

The nomination does more than name a recipient. It can decide how they take the benefit. A dependant (broadly a spouse, civil partner, or a child under 23) can be offered dependant’s drawdown where the scheme offers beneficiary drawdown — it must be a money purchase arrangement, schemes do not have to offer it and many do not (PTM072410). A non-dependant — an adult child, say — can be offered nominee’s flexi-access drawdown only if they are an individual the member nominated. Where there is no dependant and no nomination, the administrator can nominate someone. But where a dependant exists, an un-nominated non-dependant can be shut out of drawdown and left with a lump sum (PTM071300).

That is the cost of a stale form. The money rarely goes to the wrong person — the administrator’s discretion usually prevents that. But the right person may be unable to keep the fund in the tax-efficient drawdown wrapper, and a successor may be unable to inherit the drawdown in turn.

What this guide does not do

Whether a nomination should be made, changed, or directed to a trust rather than an individual is an advice question, and it interacts with the two-year rule and the death-benefit tax rules — a lump sum to a trust, for instance, can attract the 45% charge. This guide explains how nominations work; it does not recommend how to complete one. For planning and illustration only; not advice.

For the numbers the nomination leads to: a tax-free lump sum on a death before 75 tests against the lump sum and death benefit allowance, which the LSDBA calculator measures, and from 6 April 2027 the fund itself can bear inheritance tax, priced by the Pension IHT calculator.

PTM072410 (beneficiary drawdown) · PTM071300 (nominees and successors) · PTM071000 (death benefits overview) · IHTM17051 (discretionary death benefits outside the estate)