Designating beneficiaries of your pension

Navigating the intricacies of pension funds involves understanding not only the mechanisms of contributions and withdrawals but also the crucial aspect of designating beneficiaries. Among these considerations, the concept of qualifying dependants holds significant importance.

When individuals complete or update their Expression of Wish, they must grasp the distinction between beneficiaries and qualifying dependants within the framework of pension regulations. While lump sums can be disbursed to any beneficiary, whether nominated or not, the allocation of funds to provide income after your death is reserved for qualifying dependants or expressly nominated individuals.

For pension purposes, a qualifying dependant may fit into one of the following categories:

  1. Married spouse, civil partner or nominated qualifying partner:  Typically, a person you are legally married to qualifies as a dependant. This relationship is often recognised regardless of financial dependency.
  2. Children: This can be your own, legally adopted or in certain circumstances other dependant child who has not yet reached age 23, or who has reached that age and, in the opinion of the scheme administrator, was at the date of your death dependant on you because of physical or mental impairment. More information about a dependant child can be found in our Bereavement Guide.
  3. Financial Dependency: Individuals who can demonstrate financial dependency on the pension fund member may be considered qualifying dependants. This could include elderly parents or disabled relatives who rely on the member for financial support.
  4. Cohabitants: In some cases, individuals who are living with the pension fund member and can prove financial interdependence may be recognised as qualifying dependants, although this can vary widely depending on jurisdiction and fund rules.
  5. Other Dependant Relatives: Some pension funds extend qualifying dependant status to other relatives who are financially dependant on the member, such as siblings or grandchildren, although this is less common.

It’s essential for pension fund members to review the specific rules and regulations of their pension scheme to understand who qualifies as a dependant and to ensure that their Expression of Wish accurately reflects their intentions for distributing funds after their death.

We would always recommend that you discuss your Expression of Wish and designating beneficiaries of your pension with a Regulated Financial Adviser.

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