Could your pension go to the wrong person?

There is said to be a growing risk that people’s pension benefits will go to the wrong person after they die.

This follows new figures published by the Office for National Statistics revealing an increasing number of older people getting married and divorcing – so-called ‘silver splicers’ and ‘silver splitters’.

Mutual insurer Royal London said many pension schemes have forms which allow scheme members to nominate who will be the ‘beneficiary’ if the member were to die. 

This could cover the payment of an ongoing pension to a surviving widow or widower and/or payment of lump-sum benefits. 

Changes in marital status

But Royal London has warned that, if the form is not updated when someone changes their marital status, this can mean an ex-spouse receives the benefits at the expense of a current spouse or partner.  It also means that children and stepchildren of a new relationship may not be provided for.

If information is out of date, scheme trustees and administrators can undertake their own investigations to decide who should be paid.  This can include looking through wills, speaking to family, friends or colleagues to work out the personal circumstances of the deceased at time of death.

Nomination Forms

However, the insurer said that keeping Nomination Forms updated can make the process much quicker and helps to make sure that money goes to the right family members.

Helen Morrissey, of Royal London, said: "Far more people are either getting married or separating later in life than in the past.   As well as new spouses and partners, this brings new children and stepchildren into the mix. 

"We would encourage anyone who has changed their marital status since they first joined a pension scheme to make sure that the scheme knows their wishes.  This includes pension rights that you may have built up when you worked for previous firms.”

Pension advice

Aberdein Considine’s independent financial advisers - who are authorised and regulated by the Financial Conduct Authority (FCA) - can guide you through the pension maze and help you tailor a plan to your circumstances.

To find out how we can help you, click here.