Claiming a deceased parent’s pension can be a daunting process.

It can sometimes be difficult to locate the pension provider and understand how many pensions your parent has.

Many people will think that the process of claiming a deceased parent’s pension gets wrapped up with the work sorting out the Will. This isn’t actually the case as most of the time a pension is separate from the assets directed via the Will.

In this article I will be focusing on personal or workplace defined contribution pensions. The pensions where there is a pot of money rather than State or defined benefit pensions where it is just an income.

Hopefully it will be useful for those children in the sad position of having lost a parent and also for those parents who are looking to plan ahead and make things as easy as possible for their children once they are gone.

Pensions are a great asset to inherit.

They are likely to be a parents second largest asset after the home and in some cases the biggest financial asset a parent will own.

What’s great about claiming a deceased parent’s pension is that you can usually do it without having to pay Inheritance Tax.

Pensions are generally free of Inheritance Tax making them a great way to pass on wealth to children.

Not only that, depending on what age the parent was when they died, pension withdrawals by the children could be tax free forever.

You also don’t need to wait until probate is completed. Whilst administration is ongoing with the rest of the estate you can be claiming a deceased parent’s pension. Unlike a property which may take a long time to value and sell, cash from a pension can be released quickly and easily.

The key starting point for claiming a deceased parent’s pension is the pension nomination form, also known as an expression of wish form.

This document is a bit like a Will but for the pension only. It will state who the pension should go to on death.

Every pension provider will have their own version of this form, you just need to request it. For some they will allow you to complete the details online rather than write on a paper form.

You can nominate whoever you want on the form and even direct it to multiple beneficiaries.

The beauty of a pension nomination form is that it can be changed whenever you want without cost. You just rip up the previous form and complete a new one. Just make sure the pension provider is clearly using the most up to date version.

Now, just because a parent has completed a nomination form doesn’t mean it will definitely, automatically pass to the beneficiaries they state.

In many cases the pension is not technically owned by the parent. It is held on trust for them by the pension trustees which is why it benefits from favourable Inheritance Tax treatment.

This means on death the pension trustees decide who should inherit the pension although in the vast majority of cases they are going to follow what was stated on the nomination form.

You can notify the pension provider of a death via phone, email or letter. In order for the provider to confirm the death the first document they will need to see is the death certificate.

Some providers will require the original (so always good to get multiple copies of the death certificate) and others will accept a scanned verified copy, perhaps if you are using a Financial Adviser.

The provider will log the death on their system and immediately freeze new instructions on the pension. The pension will stay invested during this time, but it will not be able to be changed until the beneficiaries have been identified.

The provider will usually then write to you with a ‘death pack’ outlining what further documentation they will need. This will usually consist of:

Of course, every provider is slightly different but, in my experience, they will be as helpful as possible at a difficult time. Don’t be afraid to ask them questions.

As a beneficiary the options for inheriting the pension funds are as follows:

Receive a cash lump sum. OR

Transfer the pension to you and then you keep the pension as a pension.
It can be very beneficial to keep the pension as a pension. More on this in a separate article.

The key thing to do as a parent is to be organised. Make sure your pension nomination form is always up to date. In my capacity as a Financial Adviser, I have reviewed some pensions and found the ex-wife or ex-husband is still nominated as a beneficiary!

Make sure your children know exactly where your Will is, who the executors are and where your pension nomination form is.

Make a list of your pension providers and make sure this detail is included with the Will and pension nomination form.

Although we don’t like talking about money, it’s a good idea to spend time understanding what options your children have when claiming a deceased parent’s pension.

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