Thousands of pension savers risk passing their money to an ex-spouse they hate because they don’t keep up with their financial admin when they stop seeing them.
Pension experts reckon at least 750,000 retirement savers forget to tell their provider that they have divorced, married again or got together with a new partner.
And if they have already told the provider that the ex-spouse or former partner should receive any payments and benefits from their pension should they die, then the company will follow that instruction.
Updating the paperwork is simple. When the pension started, the saver would have been sent an ‘expression of wishes’ form for completion.
Fill in an expression of wishes
This form tells the pension firm who to pay any benefits to when the saver dies. The contents are considered alongside wills and speaking to relatives but are considered a powerful indication of whom the saver wanted to inherit their cash.
All a pension saver has to do is complete a new ‘expression of wishes’ form when they start life with a new partner.
Pension firm Royal London has crunched the numbers and reckon 42% of the 55 to 64-year-old age group who have remarried or live with a partner have pension rights that are likely to leave benefits should they die.
This suggests 750,000 people may leave their pension pots to the wrong person if their ‘expression of wishes’ is out of date.
Relationships can change
Helen Morrissey, personal finance specialist at Royal London said: “Over the course of our lives, many of us will be in a number of different relationships. The person we want to receive any pension benefits after we are gone is likely to change over time.
“But if we have not told all our past pension schemes about our new wishes and our new circumstances, there is a risk that the wrong person will stand to gain. It is important that people make sure that all of this information is kept up to date.”
Pension cash is an important asset on death as the fund remains outside the estate and is not liable to inheritance tax.