In the UK, pension death benefits are paid at the discretion of the scheme trustees, not under the deceased’s will. A nomination form guides the trustees but is not legally binding. Families who are excluded can challenge trustee decisions through the scheme’s dispute resolution process or the Pensions Ombudsman.
Pension pots sit entirely outside your will. When someone dies with an unspent pension, the money does not form part of their estate — and no matter what the will says, the trustees of the pension scheme decide who receives the death benefits. For families who expected to inherit, or who have been cut out entirely in favour of someone else, this can be one of the most financially significant and least understood aspects of a loved one’s death.
Understanding how the system works, what rights you have, and what is about to change from April 2027 is essential for anyone facing this situation.
Read our complete guide on contesting a will for lack of capacity.
Why Pensions Bypass the Will
Most UK pension schemes are held in a discretionary trust. This structure means that the pension assets are owned by the scheme trustees, not by the pension member personally. Because the member does not technically own the pension pot — only the right to draw from it during their lifetime — it does not form part of their estate when they die and cannot be bequeathed under a will.
The trustees hold the death benefits on trust and have a legal duty to exercise their discretion in good faith, taking all relevant circumstances into account. Their decision cannot be dictated by the will, and a beneficiary named in the will has no automatic entitlement to the pension.
The Nomination Form: Guidance, Not Instruction
The mechanism by which pension members communicate their wishes to the trustees is the nomination form — sometimes called an expression of wishes. This document names the people the member would like to benefit from the death benefits. Although the nomination form provides a clear expression of the member’s intentions, it is not legally binding on the trustees.
The trustees are required to consider it seriously, but they retain the discretion to depart from it — for example, where family circumstances have changed significantly since the form was last updated, where the nominated person has died, or where the trustees become aware of information that makes a different distribution more appropriate.
This discretionary structure has historically been one of the most powerful inheritance tax planning tools available: because the pension sits outside the estate, it falls outside the IHT net. From 6 April 2027, this changes significantly.
The 2027 Inheritance Tax Changes — What They Mean for Disputes
The Finance Act 2026 brings most unused pension funds and death benefits within the inheritance tax estate for deaths on or after 6 April 2027. The government estimates that around 10,500 estates will acquire a new IHT liability as a result, with an average increase of approximately £34,000 per affected estate.
Critically, for deaths after April 2027, personal representatives — not pension scheme administrators — will bear the IHT reporting and payment liability. This means pension death benefits will become directly entangled with the estate administration and probate process in a way they never have been before. Death-in-service benefits from registered pension schemes are excluded from the scope of the reforms.
For families dealing with a disputed estate, this change matters in several practical ways. The inclusion of the pension in the taxable estate affects the overall IHT calculation for all beneficiaries. It also increases the financial incentive for family members who have been excluded from the pension nomination to challenge the distribution.
When Can a Nomination or Trustee Decision Be Challenged?
The Internal Dispute Resolution Process
If you dispute how a pension provider has interpreted nominations or exercised its discretion, the scheme’s own internal dispute resolution process is the required first step. Trustees and administrators must follow the scheme rules and consider evidence including updated nomination forms, relationship histories, and financial dependency information. Any formal complaint must be submitted in writing and the scheme must respond within a set timeframe.
The Pensions Ombudsman
If the internal process fails, or if you believe the trustees have acted unfairly or maladministered the pension benefits, you can escalate to the Pensions Ombudsman. The Ombudsman investigates complaints of maladministration and can make binding determinations within the scope of pension scheme rules and relevant law. The Ombudsman does not decide questions of will validity, but can determine whether the trustees acted properly in exercising their discretion.
Grounds on which trustee decisions have been successfully challenged before the Ombudsman include: failure to follow the scheme’s own rules, failure to consider a nomination form that was on file, a decision based on inaccurate information, and failure to take into account relevant evidence of financial dependency.
Inheritance Act Claims and Section 25
Where the pension pot dwarfs the rest of the estate, a family member who has received no provision — or insufficient provision — may have a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Under section 25(1) of the Act, the court has power to treat pension death benefits paid to a third party as “net estate” for the purposes of an Inheritance Act claim in certain circumstances — particularly where the deceased had the power to nominate and the payment was in effect a testamentary disposition.
This is a complex and fact-specific area of law. Qualifying applicants under the Inheritance Act include spouses, former spouses, cohabitants of two or more years, children of the deceased, and any person who was being maintained by the deceased immediately before death. The claim must be brought within six months of the grant of probate.
Practical Steps for Families Facing a Pension Dispute
Request a copy of the nomination form. You are entitled to request information about how the trustees exercised their discretion and what documentation they relied upon. A subject access request under the UK GDPR may be required if the scheme is reluctant to disclose.
Gather evidence of financial dependency or relationship. The trustees are required to consider the member’s circumstances and those of any dependants. Evidence that the deceased was financially maintaining you — or that you had a long-standing relationship the nomination form does not reflect — is directly relevant to any challenge.
Check when the nomination form was last updated. A nomination form that has not been updated for twenty years, made before a divorce or remarriage, or made before the birth of children, may not accurately reflect the deceased’s intentions. Trustees are expected to take this into account.
Act quickly. The Pensions Ombudsman has a three-year time limit from the date of the decision for most complaints. Inheritance Act claims must be brought within six months of probate. Time limits in this area are strict.
Frequently Asked Questions
Can a will override a pension nomination?
No. A pension held in a discretionary trust bypasses the will entirely. Whatever the will says about the pension is legally ineffective — the trustees are not bound by it. The only way to align pension benefits with your will is to update your nomination form and keep it current. From April 2027, when unused pension funds are brought into the IHT estate, pensions will become more entangled with the estate administration process, but the underlying discretionary structure will remain.
What if the pension member never completed a nomination form?
Where there is no nomination form, the trustees must exercise their discretion without any guidance from the member. They will typically investigate the member’s family circumstances, identify financial dependants, and distribute accordingly. The absence of a form is not necessarily fatal to a family member’s claim — but it does make the outcome less predictable and more subject to challenge if the trustees’ decision is perceived as unfair.
Do the April 2027 inheritance tax changes affect existing nominations?
Yes, indirectly. Existing nominations remain legally effective, but the tax consequences of honouring them will change for deaths on or after 6 April 2027. Pension members are strongly advised to review their nominations before that date, particularly where the pension represents a significant proportion of their wealth. For families where a death has already occurred — or where a dispute is already in progress — the pre-2027 rules continue to apply.
Conclusion
Pension death benefits represent some of the most significant wealth transfers in modern estates — and some of the most bitterly contested. The discretionary structure that makes pensions tax-efficient also creates uncertainty for families who expected to benefit and were overlooked.
From April 2027, the landscape changes again as pensions enter the inheritance tax net. For anyone currently navigating a pension dispute, the rules that apply depend entirely on the date of death and the specific scheme involved.
Contest a Will Today has more than 30 years of experience advising families on contentious probate and inheritance disputes across England and Wales, including cases involving pension death benefit disputes and Inheritance Act claims. If you believe a pension nomination has been used unfairly — or that the trustees have failed to exercise their discretion properly — call us on 0333 800 2929 for a free initial conversation, or visit contestawilltoday.com.
Learn more about our No Win, No Fee, and Contentious Probate services.
Meet Our Founder
With over 30 years of experience across civil litigation and dispute resolution, DS Bal brings a deep, broad understanding of the legal process to every case. His background spans complex disputes involving individuals, families, and estates. LinkedIn
