On the go: Master trust Nest has introduced a death benefit option to give members greater choice about how their pension pots are passed on after death.
Nest on Monday announced its members can now opt into discretionary decision-making, whereby their pot is unlikely to be considered as part of their overall estate for inheritance tax purposes.
Members can still choose to nominate a beneficiary as before, but the option they select will affect how the master trust makes the payment upon death, and therefore the overall payout.
Under the original nomination, Nest will pay out a pension pot only to the nominated beneficiary and the assets would be considered to form part of the member’s estate for IHT purposes; potentially leaving the beneficiary with a smaller inheritance.
Under the new death benefit, Nest said it will take the member's wishes into account when deciding to whom the pension pot should be paid, and any changes to personal circumstances before making a payment. In this case, the pension pot is unlikely to be considered for IHT purposes.
The change, which is available via an online expression of wish form, provides members with the “best of both worlds”, according to Nest.
It said changing member demographics and the increasing value of pension pots means that it is now more likely members’ pots could have an impact on their estate.
Mark Rowlands, Nest’s director of customer engagement, said: “We know some of our members are concerned about the impact their pension pot may have on their IHT position. This is why we have introduced this option.
“The priority for other members may be to have certainty over who their pot is paid to. For these members, we have retained the option to nominate a beneficiary.”
Mr Rowlands continued: “This change is the best of both worlds – it gives our members the freedom to consider their circumstances and make the most appropriate choice for them.”
