Martin Lewis pension warning as little-known fact means savings could go to wrong person | Personal Finance | Finance
He told viewers of his ITV show, The Martin Lewis Money Show, this is an “important thing to do” to make sure a person’s pensions go to the person they want to inherit the assets. He urged people to fill out an Expression of Wish or nomination form for their private pension and to make sure it is up to date.
The financial journalist said it’s important the document is up to date, as otherwise, the funds could end up going to an ex-partner if they were previously nominated and it has not been changed.
Mr Lewis said: “You can’t put your pension in your will. What you have to do if you want to leave your pension to someone, is you go on to your company pension or your private pensions, and you fill out an expression of wishes or a nomination form, which tells the trustees or tells the company who you want your pension assets to go to if you die.
“Go and do one of those if you haven’t, and if you have, make sure it’s up to date.”
Wealth management firm True Potential previously spoke to Express.co.uk about the importance of having an Expression of Wish in place for a pension.
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The group said this can often be arranged in a 98 percent, one percent, one percent format, with a person’s spouse or partner inheriting 98 percent of the scheme while each of their children receive one percent each.
The idea of this setup is that when the person with the 98 percent dies, the Expression of Wish will indicate who should then inherit the pension.
If an individual with two children allocates one percent to each of them, they will each likely get 50 percent of the assets when the person with the 98 percent dies.
Daniel Harrison, CEO of True Potential, said: “The benefits of keeping an inherited pension alive as a beneficiary pension are clear.
“This is why we’ve been speaking with all of our clients to explain the importance of completing an Expression of Wish.
“We’ve also been encouraging them to speak with their beneficiaries to provide them with information to ensure they make the right decision.”
The annual allowance for how much a person can save into a pension tax free is currently £40,000.
Mr Harrison encouraged people to look at pensions as a savings option for their future. He said: “The potential investment growth, often higher than high street bank account rates, also makes this an attractive option to consider.
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“However, I would always recommend for people to speak to a financial adviser before making any investment decisions as the best options will vary on a case by case basis and an adviser can tailor an approach to what is best for you.”
Investing funds in pension schemes comes with the benefit of earning a person compound interest, as they eventually earn interest on the initial interest they earn on the amount, with their pot growing over time.
Another consideration for people looking at their pension savings is how much state pension they are on track to receive.
A person can find out how much state pension they will receive using a state pension forecast tool on the Government website.
An individual typically needs 30 years of National Insurance contributions to get the full basic state pension and 35 years of contributions to get the full new state pension.
State pension payments are increasing in April by 10.1 percent, with the full basic state pension increasing from £141.85 a week to £156.20 a week while the full new state pension is going up from £185.15 a week to £203.85 a week.
People can top up their National Insurance contributions across several years by voluntarily paying contributions.
The Martin Lewis Money Show Live airs on Tuesdays at 8pm on ITV 1.
For the latest money news, follow us on Twitter at @Expressmoney_.
