Pension nominations versus wills

This is a really important area where many people get caught out, and the answer is more nuanced than a simple yes or no.

General position:

Most pension schemes operate outside of a person's estate for inheritance purposes. This means that a pension death benefit is typically not governed by the will at all. Instead, the scheme trustees or administrators have discretion over who receives the benefit, and they will take into account any expression of wish or nomination form the member has completed, but they are not legally bound by it.

So to answer your question directly: a pension nomination does not technically "override" a will, because the pension fund usually never forms part of the estate that the will deals with in the first place. They operate in parallel but separate systems.

How pension death benefits typically work:

1. The member completes an expression of wish or nomination form with the pension scheme, naming who they would like to receive the benefits on death.
2. When the member dies, the trustees consider that nomination alongside other relevant factors such as the member's personal circumstances, dependants, and any other information available.
3. The trustees then exercise their discretion to pay the benefit to whoever they consider appropriate.

Why trustees have discretion:

The reason most pension schemes are set up this way is to keep the death benefit outside the deceased's estate for inheritance tax purposes. If the member had an absolute legal right to direct where the money went, HMRC could argue it formed part of their estate and should be taxed accordingly. The discretionary trust structure avoids this.

Key practical points:

A nomination form is not binding on the trustees in most schemes. It is an expression of wish. Trustees will usually follow it, but they are not obliged to. If the member's circumstances have changed, for example following a divorce or new relationship, and the nomination form has not been updated, trustees may decide to pay the benefit to someone other than the person named.

If no nomination form has been completed, trustees will look at the member's dependants and personal circumstances and decide accordingly. This can lead to delay and uncertainty.

Some older pension contracts, particularly certain personal pensions and retirement annuity contracts, may work differently and may pay benefits to the estate, in which case the will would govern distribution. It depends entirely on the scheme rules.

Where complications arise:

Divorce is a common flashpoint. If someone nominates their spouse, then divorces but forgets to update the nomination, the trustees may still pay the ex-spouse. Equally, they may investigate and pay the new partner or children instead. There is no certainty either way.

Another issue arises where someone assumes their will covers everything, including their pension. It almost certainly does not, and the pension could end up going to someone unintended.

Practical steps:

1. Review your pension nomination forms regularly, especially after any major life event such as marriage, divorce, the birth of a child, or a bereavement.
2. Check the specific rules of each pension scheme you belong to, as the position can vary.
3. Make sure your will and your pension nominations are consistent with your overall wishes, even though they operate separately.
4. If you have concerns about who might receive your pension on death, contact the scheme trustees or administrators to understand how they exercise their discretion and what factors they take into account.

This area sits at the intersection of trust law, pension law, and succession law, and the specific scheme rules matter enormously. If significant sums are involved or the family situation is complex, it is worth getting the details right.