There are a few key steps you can take to help you feel confident that your pension savings will go to the right people in the right way. Here’s what to do:

1. Make sure your pension offers death benefits

A death benefit is the money that is paid out after your death. Most pension plans will allow you to nominate whoever you want to inherit your pension savings when you die. They’ll also offer those who benefit a range of options for taking the money. However, not all pensions are the same. For example, most annuities (a guaranteed income for life) will stop paying income when you die, and you won’t be able to pass it on unless it’s on a joint life basis or has a guarantee period. So an important first step is to check with your provider if your pension offers what you need

If you find that your current pension plan doesn’t offer the flexibility you’d like, you might have the option to transfer it to a different type of plan or even another provider. But not all plans will allow this, and transferring won’t be right for everyone

For example, your pension plan might have valuable guarantees or benefits you don’t want to lose. Some ‘defined benefit’ or ‘final salary’ pensions entitle you to a certain income level in your retirement. Or older pension plans may have valuable guaranteed annuity rates. If you’re unsure, consider getting financial advice

2. Tell your pension provider who you want your pension to go to

While there can be practical, financial and emotional benefits to making a will, people don’t always realise that your will doesn’t usually control who inherits your pension savings

Your pension provider or trustees will ultimately decide where your pension savings go. They will consider your wishes if you have specified the people and causes (or ‘beneficiaries’) you want to receive, but they aren’t bound by them. So make sure they’re named

The first thing which needs to be in place is an expression of wish form. This is really important to keep the tax efficiency of your pension benefits upon your death. If grandchildren are not named in the nomination form, the even if you’ve named them as beneficiaries in your will, they will have no option other than to receive a lump sum. If you are over age 75 at the time of your death, the benefits are taxed at the beneficiaries’ marginal tax rate. This means that if beneficiaries are not named on the nomination form and are only entitled to a lump sum, they will likely suffer a large tax liability. If they are named beneficiaries on the nomination form, they can leave the money where it is until they need it, take a regular income within their tax allowances or receive a lump sum. Doing this gives beneficiaries greater flexibility on how they use the pension benefits

If grandchildren are named on the nomination form, they can each take £12,570 a year from the pension, which would be covered by their annual personal allowances and not be subject to tax, based on the current level of the personal allowance, which is frozen until the 2025/26 tax year. Although you can’t specify how these monies are spent, you should speak to your (grand)children to let them know your wishes, and they will hopefully abide by them once you are no longer here

When considering beneficiaries, it’s important to note that if you have a spouse under age 75, naming them as the main beneficiary can have significant tax benefits. For instance, if you have four grandchildren, you can nominate them to receive 1 per cent each and your spouse the other 96 per cent. This arrangement ensures that if something happens to both of you simultaneously, the grandchildren are still named on the form and can take benefits as needed within tax allowances. The key advantage of having a spouse under age 75 as a beneficiary is that the tax on death benefits is determined by the age of the nominee. If the nominee dies before age 75, the pension benefits can be passed to children and grandchildren tax-free

3. Regularly review your beneficiaries

Once you’ve nominated your beneficiaries – don’t just stop there and forget about it. It’s important to review them regularly and update when necessary

Wishes and plans change, especially after big life changes like the birth of children or grandchildren, marriages and divorces. If you don’t keep all your pension plans up to date as your circumstances change, you risk your pension savings not going to the right people if you die

This is particularly important with grandchildren. Failing to amend your nomination on the birth of, for example, your fourth grandchild, may cause unnecessary complications later

4. Consider the tax they’ll pay when they receive your pension

Pensions can be a tax-efficient way of passing on your wealth because they aren’t part of your taxable estate, so inheritance tax doesn’t usually apply. But other taxes, such as income tax, may apply

If you die before the age of 75, your beneficiaries will normally inherit your pension pot tax-free. If you die after the age of 75, then your beneficiaries will pay income tax on anything they withdraw from your pension savings

The amount of tax that needs paid on your pension savings will depend on your individual circumstances and that of your beneficiaries, including the type of pension you have. Tax and legislation may change and your own individual circumstances, including where you live in the UK, will have an impact on your tax treatment