Martin Lewis issues urgent warning to anyone who’s divorced over simple mistake that could cost you £100,000
MARTIN Lewis has issued an urgent warning to anyone who's divorced due to a simple mistake that could cost you thousands.
The MoneySavingExpert founder issued the warning on Twitter and in the MSE newsletter that you can't put a pension in a will.
If you want to leave your pension to someone, there's an extra step to take to take.
You'll need to fill out an expression of wishes or a nomination form which is found on your company or private pension.
This tells the company who you want your pension assets to go to if you pass away.
In a tweet, Martin Lewis said: "Warning. Don't accidentally leave your pension to an ex!
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"You can't leave pension savings in your will. Die before taking your private/company pension and the provider/trustees decide what to do with it."
You'll need to update the expression of wishes form when you experience a change like getting a divorce.
You should fill one out for each pension you have in case you have more than one.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said its vital to keep these forms up to date.
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She added: "If you're married, it will often go to your spouse under the rules of the scheme, but if you have split with your partner, your family could end up with the nightmare scenario of having to battle over money.
"It's essential to check whether you've updated the form, because your pension could be worth far more than you think."
The average pension pot for people aged between 55 and 64, who haven't already accessed their pension, is £107,300, Sarah said.
But the top 10% of earners have a pension worth even more than this, coming in at around £637,500.
This means that you could risk hundreds of thousands of pounds going to an ex partner, if you don't keep the form up to date.
Your pension rights in death explained
Passing on pension money after you die is called ‘death benefits’.
Check the documents on any workplace or private pensions you have and see what death benefits they offer – many pensions will give your spouse or person you have named as your heir either a lump sum or let them inherit the remaining pension after you die.
Spouses and civil partners may also be able to inherit some of your state pension payments after you die.
It’s not paid automatically, they have to make a claim for the Additional State Pension.
The rules depend on whether the person who died reached the state pension age before April 2016 or afterwards, but typically any money your spouse is entitled to is added onto their state pension when they start receiving it.
If your spouse or civil partner remarries, they could lose the right to inherit your pension.
But whatever your scenario, you can check out what you're entitled to on the government website.
Martin Lewis previously warned that solicitor-drafted wills are the "gold standard", and you should aim to do your will this way where possible.
If you die without a will, the state rather than you or your family will decide where your assets go.
Of course, to decide where you want money to go yourself, you'll need to write a will.
Do note that if you get married in England and Wales, if you've made a will before that point, you'll need to make another one.
Martin Lewis also suggest rewriting your will if your circumstances change, like if you split up from a partner.
You can get a free will if you book for an appointment this month at FreeWillsMonth.org.uk - but you'll need to be aged 55 or above.
There's also Free Wills October which can be accessible at different locations, including:
- Bristol
- Cardiff
- Essex
- Glasgow
- Leeds
- Liverpool
- London
- Newcastle
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Meanwhile, Martin Lewis urged households not to throw away ‘hidden pay rises’ worth £1,000s – here's how to get them.
Plus, one Martin Lewis fan has revealed how they found £121,000 in lost pension cash thanks to a clever tip.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]