Under the Expression of Wish option, Nest members can opt in to discretionary decision-making by completing a simple form indicating who they would like their pension paid to after their death. Following their death, Nest will then decide whether or not to pay their pension pot to the beneficiaries listed on their form - taking changes to the members’ personal circumstances into consideration. If Nest decides not to pay to those beneficiaries, the pot will usually be paid to the member’s estate.
This exercise of discretion means the member’s pension pot will not usually be considered part of their estate for Inheritance Tax purposes.
Previously, members were only able to nominate a beneficiary, with the result that their pot would be paid to that beneficiary as long as they were alive and traceable at the date of death. In this case, the members’ pension pot would usually be considered to form part of their estate for inheritance tax purposes.
The changing Nest member demographic and increasing value of their pension pots, driven for example by the lifting of the restrictions on transfers and contributions in 2017, means that it’s now more likely members’ pots could have an impact on their estate for inheritance tax purposes. Nest members should therefore carefully consider whether they want to nominate a beneficiary or make an expression of wish as this choice will have implications for how their pension pot will be dealt with upon death.
It is an easy online process and Nest has worked with specialist agencies to make sure the communications are simple, easy to understand, and accessible. Nest encourages their members to log into their accounts and choose the option that is right for their circumstances. They should also consider seeking professional advice before making a decision.
Mark Rowlands, Nest’s Director of Customer Engagement, said: “At Nest we are always working to improve our services for our eight million members. We know some of our members are concerned about the impact their pension pot may have on their inheritance tax position. This is why we have introduced this option.
“The priority for other members may be to have certainty over who their pot is paid to. For these members, we have retained the option to nominate a beneficiary.
“This change is the best of both worlds – it gives our members the freedom to consider their circumstances and make the most appropriate choice for them.”
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