UK Pension Beneficiary Nominations: What Expats in Australia Should Know

For UK expatriates living in Australia, reviewing UK pension beneficiary nominations is an important part of retirement and estate planning. Understanding who may receive your pension benefits when you die can be particularly important ahead of the April 2027 UK Inheritance Tax changes.

Many people have accumulated substantial pension benefits during their working lives in the UK. However, while considerable attention is often given to pension values, investment performance and retirement income, the arrangements governing pension benefits after death may receive much less consideration.

Who will receive your UK pension when you die?

The answer may depend on the type of pension you hold, the scheme’s rules, your beneficiary nominations and the discretion exercised by pension trustees or administrators.

With significant changes to the UK Inheritance Tax treatment of pensions taking effect from 6 April 2027, reviewing these arrangements is becoming increasingly relevant.

For individuals living in Australia who retain UK pensions, the interaction between UK pension rules, inheritance tax and Australian estate planning can be particularly complex.

1. How Do UK Pension Beneficiary Nominations Work?

A UK pension beneficiary nomination allows a pension scheme member to indicate who they would like to receive any benefits payable following their death.

Depending on the pension arrangement, this may involve identifying a spouse, partner, children, other family members or other eligible beneficiaries.

However, it is important to understand that a nomination does not necessarily create an automatic legal entitlement to receive pension benefits.

Many UK pension arrangements operate under discretionary death-benefit provisions, meaning the scheme trustees or administrators may have discretion over the distribution of certain benefits.

A nomination can therefore provide important guidance, but the ultimate outcome will depend on the pension scheme’s rules and the nature of the benefits payable.

A beneficiary nomination should not be confused with a guarantee that the nominated person will receive the pension benefits.

2. What Is an Expression of Wish?

UK pension beneficiary nominations are often recorded through an expression of wish, allowing members to identify the individuals they would prefer to receive benefits following their death.

It allows the member to communicate their intentions to the trustees or scheme administrator.

For example, someone may nominate their spouse to receive pension death benefits or indicate that benefits should be shared between children.

In discretionary arrangements, trustees will generally consider the expression of wish when exercising their discretion, but they may also need to consider other relevant circumstances.

These could include changes in family relationships, financial dependency, scheme eligibility rules and other information available at the time of death.

Some pension arrangements operate differently, including those involving contractual beneficiary designations or scheme-specific entitlements.

Consequently, the legal effect of a nomination or expression of wish should always be checked against the particular pension arrangement.

An expression of wish is an important planning document, but it is not necessarily a binding instruction.

3. Defined Benefit and Defined Contribution Pensions: Why the Difference Matters

The type of UK pension you hold can materially affect what benefits are available following your death. Understanding your UK pension options is therefore an important starting point when reviewing death-benefit arrangements.

Defined Benefit pensions

A UK Defined Benefit pension, sometimes referred to as a final salary or salary-related pension, generally provides benefits calculated under the scheme’s rules.

Depending on the arrangement, death benefits may include:

• A surviving spouse’s or civil partner’s pension.
• Pensions for eligible children or other dependants.
• A lump-sum death benefit.
• Guaranteed payments where death occurs within a specified period.

The benefits available will depend on the scheme rules, whether the member has retired and the circumstances at death.

Importantly, a Defined Benefit pension does not necessarily represent an investment fund that can simply be passed to nominated beneficiaries.

Defined Contribution pensions

A Defined Contribution pension generally involves an identifiable pension fund or investment account.

Depending on the arrangement and applicable rules, remaining pension benefits may be available to eligible beneficiaries as lump sums, beneficiary drawdown or other permitted forms of benefit.

The tax treatment can depend on several factors, including the member’s age at death, the type of benefit, applicable time limits and the beneficiary’s circumstances.

For both pension types, the scheme’s actual death-benefit provisions should be established before making assumptions about inheritance or estate planning.

4. Do UK Pensions Automatically Pass Under Your Will?

Not necessarily.

UK pension beneficiary nominations do not necessarily determine how death benefits are distributed. Many UK pension arrangements are governed by their own scheme rules rather than the terms of the deceased member’s will.

Where trustees or administrators exercise discretion over death benefits, the member’s will may be relevant to understanding their intentions but does not necessarily determine the distribution.

Other pension arrangements may involve different contractual or legal entitlements.

This distinction is particularly important for UK expatriates living in Australia.

An Australian will may deal with Australian assets, but it should not be assumed that it controls the distribution of benefits held within a UK pension scheme.

Likewise, having a UK will does not automatically resolve every pension beneficiary issue.

Pension nominations, scheme rules and wider estate-planning documents should be reviewed together rather than in isolation.

5. How Will the April 2027 UK Inheritance Tax Changes Affect Pension Death Benefits?

From 6 April 2027, significant changes to the UK Inheritance Tax treatment of pensions are scheduled to take effect. We explore the wider implications for UK expatriates in our article on UK pensions and inheritance tax from April 2027.

Under the announced reforms, most unused pension funds and certain pension death benefits will be brought within the scope of an individual’s estate for UK Inheritance Tax purposes.

Further information on the reforms, including the treatment of unused pension funds and pension death benefits, is available in HMRC’s official guidance.

This represents an important change from the treatment historically applying to many discretionary pension death benefits.

However, the reforms do not mean that every pension death benefit will automatically generate an inheritance-tax liability.

The outcome will depend on the legislation, the type of pension benefit, any applicable exclusions, the deceased individual’s circumstances and the available exemptions and allowances.

For example, benefits passing to a qualifying spouse or civil partner may benefit from an inheritance-tax exemption, subject to the applicable rules.

Certain death-in-service benefits and other specified benefits are also treated differently under the reforms.

It is also important to distinguish between the inclusion of pension benefits in an inheritance-tax calculation and the separate income-tax treatment that may apply when benefits are received.

Does changing a beneficiary nomination avoid UK Inheritance Tax?

Not necessarily.

A common misunderstanding is that directing pension benefits to a particular person, or completing an expression of wish, will automatically remove those benefits from the UK Inheritance Tax calculation.

Under the April 2027 reforms, that should not be assumed.

The inheritance-tax treatment will depend on the statutory rules and the circumstances of the estate, not simply on whether a beneficiary nomination exists.

Beneficiary nominations remain important, but they should not be regarded as an automatic inheritance-tax planning solution.

6. What Additional Considerations Apply to UK Expats Living in Australia?

For someone living in Australia with a UK pension, UK pension beneficiary nominations can involve considerations arising under both countries’ legal and taxation systems.  This is particularly relevant when considering UK pension transfers to Australia, where the receiving arrangements and subsequent treatment of benefits may also affect the wider retirement strategy.

These may include:

• Whether the individual remains within the scope of UK Inheritance Tax under the long-term residence rules.
• The type and value of their UK pension benefits.
• The location and circumstances of intended beneficiaries.
• The treatment of pension death benefits under applicable UK and Australian tax rules.
• Existing Australian superannuation death-benefit arrangements.
• Wills, trusts and other estate-planning documents.
• The interaction between UK pension benefits and the individual’s wider assets.

Since 6 April 2025, UK Inheritance Tax exposure for non-UK assets has generally been determined by long-term UK residence rather than domicile, subject to transitional provisions and other applicable rules.

This means that a person’s residence history can be particularly relevant when assessing their potential inheritance-tax exposure.

However, the treatment of UK pension death benefits should not be determined solely by where the member currently lives.

For some individuals, UK and Australian taxation considerations may need to be assessed separately.

There may also be important differences between how UK pension benefits and Australian superannuation death benefits are distributed and taxed.

Living in Australia does not, by itself, establish that UK pension benefits fall outside the UK Inheritance Tax regime.

7. When Should You Review Your UK Pension Beneficiary Nominations?

Beneficiary arrangements should be reviewed when personal or financial circumstances change.

Examples may include:

• Marriage, divorce or the commencement or breakdown of a relationship.
• The birth of children or grandchildren.
• The death of a previously nominated beneficiary.
• A permanent move between the UK and Australia.
• Changes to financial dependency or family circumstances.
• Retirement or commencement of pension benefits.
• Changes to relevant pension, taxation or estate-planning legislation.

The approaching April 2027 inheritance-tax reforms provide an additional reason to understand existing arrangements.

A sensible starting point is to establish which pension schemes you hold, what death benefits they provide and whether your recorded beneficiary preferences remain appropriate.

Where the circumstances involve substantial pension benefits, beneficiaries in different jurisdictions or potential inheritance-tax exposure, coordinated specialist advice may be appropriate.

The Importance of Coordinated UK–Australia Planning

UK pension beneficiary arrangements should not necessarily be considered separately from an individual’s wider retirement and estate-planning strategy.

A person may have UK pension benefits, Australian superannuation, property, investments and family members living across multiple jurisdictions.

Understanding how these arrangements interact may require input from UK pension specialists, Australian financial advisers, taxation professionals and estate-planning lawyers.

At The UK Pension Experts, our focus is helping clients understand their UK pension arrangements and how those benefits fit within their broader retirement and financial-planning objectives.

Where specialist taxation or legal advice is required, appropriately qualified professionals should be involved.

The Bottom Line

Reviewing UK pension beneficiary nominations is an important part of pension planning, but a nomination does not necessarily determine who will ultimately receive the benefits.

The type of pension, scheme rules, trustee discretion, family circumstances and applicable taxation rules can all influence the outcome.

With the UK Inheritance Tax treatment of pensions changing from April 2027, understanding existing beneficiary arrangements is becoming increasingly important for UK expatriates living in Australia.

The starting point should not simply be deciding who to nominate.

It should be understanding what benefits exist, how they may be distributed and how they fit within your wider estate-planning arrangements.

If you would like to understand how your existing UK pension arrangements fit within your wider retirement strategy, our Full Advice service explains the specialist financial-planning support available.

Important information: This article provides general information only and does not take into account your personal objectives, financial situation or needs. It does not constitute personal financial, taxation or legal advice. UK pension, inheritance-tax and Australian taxation outcomes depend on individual circumstances and the applicable legislation. Appropriate specialist advice should be obtained before making decisions.