When nominating a pension beneficiary I notice that it is recorded as an, "expression of wish" rather than an absolute direction as it would be in a will.

This appears to be 'just how it is' and since all pension providers treat nominations this way I assume there must be some legislation that controls their behaviour.

No explanation is offered at to why this is, so I wonder if anyone has
legal insight into why this is the case?

There's a pretty good explanation of the process here but not an
explanation of why:

https://adviser.royallondon.com/technical-central/pensions/death- benefits/death-benefits-discretion-and-how-to-nominate-a-beneficiary/

or https://tinyurl.com/preview/2j3evnt6

Contains:

"The scheme administrator/trustees won’t go against the individual’s wishes lightly and the reason for the decision has to be justifiable in a court of
law if need be."

but why can't I simply make a direction as I would do in a will?

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On 22/03/2024 13:06, Peter Walker wrote:

but why can't I simply make a direction as I would do in a will?

The lump sum death benefit is discretionary so as to avoid liability to Inheritance Tax, which would apply if the lump sum formed part of your
estate (subject to spouse exemptions, etc).

It avoids waiting for probate. It avoids complicating estates that
otherwise might be tiny.

Also, it provides some flexibility, where needed. For example, would
everybody think of altering their directions to the pension scheme if
their circumstances change?

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GB <NOTsomeone@microsoft.invalid> wrote in news:utk2td$2v4rr$1@dont-
email.me:

On 22/03/2024 13:06, Peter Walker wrote:

but why can't I simply make a direction as I would do in a will?

The lump sum death benefit is discretionary so as to avoid liability to Inheritance Tax, which would apply if the lump sum formed part of your
estate (subject to spouse exemptions, etc).

It avoids waiting for probate. It avoids complicating estates that
otherwise might be tiny.

To be clear I don't wish to specify the beneficiary in my will, I want to
give an binding direction to the pension company regarding the recipient of
my pension. Is it the binding direction that gives rise to an IHT
liability?

What I don't want is for my chosen beneficiary to be excluded, potentially
on a whim or following pressure from a disgruntled relative who may have
been excluded from my will. Whim unlikely but who can say as conditions of discretion are not clearly stated.

Also, it provides some flexibility, where needed. For example, would everybody think of altering their directions to the pension scheme if
their circumstances change?

Yes, just as I would change my will if my circumstances change.

--- SoupGate-Win32 v1.05
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On 22/03/2024 14:41, Peter Walker wrote:

GB <NOTsomeone@microsoft.invalid> wrote in news:utk2td$2v4rr$1@dont- email.me:

On 22/03/2024 13:06, Peter Walker wrote:

but why can't I simply make a direction as I would do in a will?

The lump sum death benefit is discretionary so as to avoid liability to
Inheritance Tax, which would apply if the lump sum formed part of your
estate (subject to spouse exemptions, etc).

It avoids waiting for probate. It avoids complicating estates that
otherwise might be tiny.

To be clear I don't wish to specify the beneficiary in my will, I want to give an binding direction to the pension company regarding the recipient of my pension. Is it the binding direction that gives rise to an IHT
liability?

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to direct
and you do so, that will bring the death benefit within the scope of IHT.

So, you'll have to balance any tax issues against your concerns that the
scheme administrators might do something you don't want.

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GB <NOTsomeone@microsoft.invalid> wrote in
news:utk7if$3098i$1@dont-email.me:

On 22/03/2024 14:41, Peter Walker wrote:

GB <NOTsomeone@microsoft.invalid> wrote in news:utk2td$2v4rr$1@dont-
email.me:

On 22/03/2024 13:06, Peter Walker wrote:

but why can't I simply make a direction as I would do in a will?

The lump sum death benefit is discretionary so as to avoid liability
to Inheritance Tax, which would apply if the lump sum formed part of
your estate (subject to spouse exemptions, etc).

It avoids waiting for probate. It avoids complicating estates that
otherwise might be tiny.

To be clear I don't wish to specify the beneficiary in my will, I
want to give an binding direction to the pension company regarding
the recipient of my pension. Is it the binding direction that gives
rise to an IHT liability?

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to
direct and you do so, that will bring the death benefit within the
scope of IHT.

Understood and thank you. I am delibrately keeping my pension fund high
to avoid IHT liability and hope the suggestion that, "the scheme administrator/trustees won’t go against the individual’s wishes
lightly" will be true.

I just wish the reasons for this were more clearly stated, my googldar is usually better than this.

So, you'll have to balance any tax issues against your concerns that
the scheme administrators might do something you don't want.

Noted and again thank you.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

Peter Walker <not@for.mail> wrote:

When nominating a pension beneficiary I notice that it is recorded as an, "expression of wish" rather than an absolute direction as it would be in a will.

This appears to be 'just how it is' and since all pension providers treat nominations this way I assume there must be some legislation that controls their behaviour.

No explanation is offered at to why this is, so I wonder if anyone has
legal insight into why this is the case?

There's a pretty good explanation of the process here but not an
explanation of why:

https://adviser.royallondon.com/technical-central/pensions/death- benefits/death-benefits-discretion-and-how-to-nominate-a-beneficiary/

or https://tinyurl.com/preview/2j3evnt6

Contains:

"The scheme administrator/trustees won’t go against the individual’s wishes
lightly and the reason for the decision has to be justifiable in a court of law if need be."

but why can't I simply make a direction as I would do in a will?

I asked this question some considerable time back when I first joined an employee pension scheme. I was concerned my wishes may not be respected, although they were simple and by no means unusual - being married my choice
was obvious.

I was told the main reason was people sometimes failed to update their preferences if their circumstances changed- especially divorce.

I happened to mention my conversation with personnel to someone I worked
with. He went quiet. Then said ‘ Oh s**t, I need to taken care of that.’ He later explained he had been divorced twice since starting the pension
scheme. The first two marriages were very short. His third, current one,
was more successful and he was concerned his first wife was on his form.

The pension scheme issued ‘reminders’ to review your preferences every year, along with your annual statement. I assume he had ignored / not read them.

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In message <l65msbFanbiU1@mid.individual.net>, at 15:36:43 on Fri, 22
Mar 2024, Peter Walker <not@for.mail> remarked:

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to
direct and you do so, that will bring the death benefit within the
scope of IHT.

Understood and thank you. I am delibrately keeping my pension fund high
to avoid IHT liability and hope the suggestion that, "the scheme >administrator/trustees won’t go against the individual’s wishes
lightly" will be true.

I just wish the reasons for this were more clearly stated,

As I hope is clear from the IHT thread I started a month ago, almost
*nothing* is "clearly stated" in that field, with every advice-giver
[even gov.uk] missing out what could be crucial bits of information.

my googldar is usually better than this.

--
Roland Perry

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On 22 Mar 2024 15:36:43 GMT, Peter Walker wrote...

GB <NOTsomeone@microsoft.invalid> wrote in
news:utk7if$3098i$1@dont-email.me:

On 22/03/2024 14:41, Peter Walker wrote:

To be clear I don't wish to specify the beneficiary in my will, I
want to give an binding direction to the pension company regarding
the recipient of my pension. Is it the binding direction that gives
rise to an IHT liability?

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to
direct and you do so, that will bring the death benefit within the
scope of IHT.

Understood and thank you. I am delibrately keeping my pension fund high
to avoid IHT liability and hope the suggestion that, "the scheme administrator/trustees won’t go against the individual’s wishes
lightly" will be true.

While it won't be stated explicitly, I think well-advised pension fund
trustees will indeed be reluctant to go against an "expression of wish"
unless there's a good reason. They could get sued by the intended
beneficiary.

--
Tim Jackson
news@timjackson.invalid
(Change '.invalid' to '.plus.com' to reply direct)

--- SoupGate-Win32 v1.05
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Roland Perry <roland@perry.uk> wrote in news:vttxh4K$wUAmFAUs@perry.uk:

In message <l65msbFanbiU1@mid.individual.net>, at 15:36:43 on Fri, 22
Mar 2024, Peter Walker <not@for.mail> remarked:

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to
direct and you do so, that will bring the death benefit within the
scope of IHT.

Understood and thank you. I am delibrately keeping my pension fund high
to avoid IHT liability and hope the suggestion that, "the scheme >>administrator/trustees won’t go against the individual’s wishes >>lightly" will be true.

I just wish the reasons for this were more clearly stated,

As I hope is clear from the IHT thread I started a month ago, almost *nothing* is "clearly stated" in that field, with every advice-giver
[even gov.uk] missing out what could be crucial bits of information.

Mild LOL on that one, my view is that I don't approach HMRC for a ruling/decision unless/until I know the the real answer to the question and have the backup to support it.

--- SoupGate-Win32 v1.05
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Tim Jackson <news@timjackson.invalid> wrote in news:MPG.406bc07ed1d5503b989fd3@text.usenet.plus.net:

On 22 Mar 2024 15:36:43 GMT, Peter Walker wrote...

GB <NOTsomeone@microsoft.invalid> wrote in
news:utk7if$3098i$1@dont-email.me:

On 22/03/2024 14:41, Peter Walker wrote:

To be clear I don't wish to specify the beneficiary in my will, I
want to give an binding direction to the pension company regarding
the recipient of my pension. Is it the binding direction that gives
rise to an IHT liability?

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to
direct and you do so, that will bring the death benefit within the
scope of IHT.

Understood and thank you. I am delibrately keeping my pension fund

high

to avoid IHT liability and hope the suggestion that, "the scheme
administrator/trustees won’t go against the individual’s wishes
lightly" will be true.

While it won't be stated explicitly, I think well-advised pension fund trustees will indeed be reluctant to go against an "expression of

wish"

unless there's a good reason. They could get sued by the intended beneficiary.

The more I am reading the more I believe that is the case. My provider
has a further information section in their beneficiary form in which I
will set out the informed nature of the 'expressed wish' to reinforce my choice.

Of course the potential benficiary could sue if they were denied but as
it turns out, one of the reasons for my bequest is that the nominated beneficiary has suffered both finanically and emotionally in the past and
so might find that a difficult path to follow. I hope to make my wishes
so clear that to deny them would be seen as unreasonable.

A significant beneficiary of my will, also my nominated executor, is
aware of my choice of pension beneficiary and has no objection to my
choice. They were until recently my intended pension beneficiary but are
amply provided in my will.

--- SoupGate-Win32 v1.05
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In message <l6gkaqF1uguU1@mid.individual.net>, at 19:00:42 on Tue, 26
Mar 2024, Peter Walker <not@for.mail> remarked:

Roland Perry <roland@perry.uk> wrote in news:vttxh4K$wUAmFAUs@perry.uk:

In message <l65msbFanbiU1@mid.individual.net>, at 15:36:43 on Fri, 22
Mar 2024, Peter Walker <not@for.mail> remarked:

If the scheme rules make the death benefit discretionary, then you
simply can't give a binding direction. Where there's an option to
direct and you do so, that will bring the death benefit within the
scope of IHT.

Understood and thank you. I am delibrately keeping my pension fund high >>>to avoid IHT liability and hope the suggestion that, "the scheme >>>administrator/trustees won’t go against the individual’s wishes
lightly" will be true.

I just wish the reasons for this were more clearly stated,

As I hope is clear from the IHT thread I started a month ago, almost
*nothing* is "clearly stated" in that field, with every advice-giver
[even gov.uk] missing out what could be crucial bits of information.

Mild LOL on that one, my view is that I don't approach HMRC for a >ruling/decision unless/until I know the the real answer to the question
and have the backup to support it.

Very few people "approach HMRC" about anything, because they know how
long it takes to get what will inevitably be an unhelpful and
noncommittal reply.

So yes, they trawl for "backup", and first place many look is the
fatally dumbed-down gov.uk website.
--
Roland Perry

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