Royal London Pension Expression of Wishes (FEB 2021)

Changes to how pension benefits are treated for inheritance tax purposes means that you would be better off updating your expression of wishes. 

When a pension scheme member dies, the scheme administrator has to pay the death benefits to someone. The process of choosing who the beneficiary(ies) should be can either involve the scheme administrator using their discretion, or the member directing the choice before their death. The way the choice is made can affect the inheritance tax (IHT) payable on the benefits. 

At one point, HMRC’s IHT manual stated that no IHT would normally apply when the direction option was used if the member survived 2 years after the nomination.  This wording was removed and the position is therefore that where direction is used, the death benefits will usually be assessed for IHT.

Additionally, it makes sense to regularly review nominations to make sure that they continue to reflect your wishes as circumstances can often change. 

Should you have any queries please feel free to contact us.


You will only need to enter your name, plan number, beneficiary name/s and % splits. Once completed, please email it to us or directly to Royal London at



The member can allow the pension scheme administrator to use discretion when deciding who should receive the death benefits from their pension arrangement. The member will tell the scheme administrator who they would like them to pay death benefits to but the scheme administrator doesn’t have to follow their wishes.  This usually means the value won’t be counted as part of the member’s estate therefore it won’t be subject to IHT. 


The member can tell the scheme administrator exactly who should receive the death benefits from their plan. The scheme administrator will pay the death benefit in accordance with the direction. The value of the death benefits will normally be counted as part of the estate for inheritance tax on their death. 

Inheritance tax

If the trustees of the pension scheme have discretion over who to pay death benefits to, the benefits are normally free from IHT.  If this discretion is taken away, the benefits could be subject to IHT. Opting for direction will take discretion away from the trustees.  So as far as IHT is concerned in most circumstances the clear winner would be discretion.  With discretion, the scheme administrator doesn’t have to abide by the member’s wishes, so the value of the death benefits usually wouldn’t be included in the deceased member’s estate and IHT would be avoided. With direction, the scheme administrator must pay the death benefits to the beneficiary(ies) nominated by the member and in the percentages specified. As the member retains control over who receives the death benefits, they would be included in their estate and so IHT may be payable. However, the value of the estate would have to be more than the nil rate band of £325,000 for IHT to be payable.  The normal spouse’s exemption would also be available if direction is used.

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