Question: What happens to my UK pension if I don't have a will?
Answer: UK pension changes may cause delays in payments to beneficiaries and, in some cases, avoidable tax charges.
Background: Proposed Changes to Inheritance Tax and Pensions (From April 2027)
From April 2027, due to UK pension changes under the UK government’s proposed reforms, certain untaxed pension lump sums —especially unused defined contribution (DC) pensions —will become subject to Inheritance Tax (IHT) where the scheme administrator has discretion over who receives them (i.e., not bound by nomination alone).
Currently, most pension death benefits are exempt from IHT if they’re paid under discretion, but there are upcoming proposed UK pension changes. From 2027, pension companies will need to contact the personal representatives of an estate within 4 weeks of being notified of the death of a policy holder.
What Happens If Someone Dies Intestate?
Personal Representatives Still Exist – They’re Called Administrators
Even if there is no will, someone (usually next of kin) can apply to become the administrator of the estate.
This is done via an application for “Letters of Administration”, the intestacy equivalent of probate. How easy is that to do from abroad?
This can take several months and will hold out possibly much needed funds for the beneficiaries of an estate.
Who Applies?
The rules of intestacy determine who is entitled to apply—usually the surviving spouse/civil partner or adult children.
Practical Implications Under Intestacy & 2027 IHT Rules
Under the proposed UK pension changes:
- No Will = Slower Process : Without a will, delays can occur in appointing administrators, which can slow down pension death benefit payments and tax reporting.
- Pension Provider Dilemma : Pension schemes may be cautious about making any discretionary payments until administrators are in place and HMRC guidance is clear.
- IHT Risk : If the administrator is slow to act, IHT deadlines could be missed or estimates may be made conservatively, potentially increasing tax exposure.
Why Having a Will Matters Even More Now- Even for Expats
If you die without a will (intestate), your family will need to apply to the court for Letters of Administration. This process appoints a personal representative (called an administrator) to deal with your estate.
Pension providers may need to contact your estate’s personal representative to determine IHT liabilities. Without a will, this can delay:
- The appointment of an administrator,
- The payment of pension death benefits,
- The settlement of any tax liabilities with HMRC.
UK pension changes can cause delays that will result in financial stress for beneficiaries and, in some cases, avoidable tax charges.
Do you have questions?
If you have any questions or would like to arrange a meeting to discuss your estate planning in light of the 2027 changes, please do not hesitate to contact us. There are a number of significant questions, as yet unanswered, that the new rules have raised.
