Can I Give My Pension to Someone Else?

While you generally cannot directly 'give' your live pension savings to another person for them to use as their retirement fund, there are specific legal and financial mechanisms that allow others to benefit from your pension in certain circumstances, such as after your death or during a divorce.

Understanding Pension Ownership and Transfers

Pensions are long-term savings vehicles designed to provide you with income in retirement. They are typically held in your name by a pension provider and are subject to specific rules and regulations. This means you cannot simply transfer the ownership of your active pension pot to another individual as a gift for them to immediately access or use as their own personal retirement fund. Pension transfers usually refer to moving your own pension pot from one provider to another for your personal benefit.

When Someone Else Can Benefit From Your Pension

Despite the general inability to directly gift your pension, there are key situations where another person can legally benefit from your pension fund.

1. Nominating Beneficiaries for Death Benefits

You have the option to nominate loved ones to receive potential benefits from your pension after you pass away. This is a crucial aspect of pension planning and ensures that your chosen individuals are considered for any remaining funds or lump sums.

• Who can be nominated? You can typically nominate various individuals, including:
  • Family members (e.g., children, parents, siblings)
  • Your spouse or civil partner
  • Friends
• How it works: By completing an 'Expression of Wish' or 'Nomination Form' with your pension provider, you indicate who you would like to receive any death benefits. While these nominations are usually not legally binding, pension scheme trustees or administrators typically follow your wishes unless there are compelling reasons not to.
• Types of death benefits: Depending on your pension scheme and whether you have started drawing your pension, benefits could include a lump sum, an income (annuity), or a drawdown fund for your beneficiaries.
• Importance: Nominating beneficiaries can help ensure your pension wealth is distributed according to your wishes and can sometimes have tax advantages for the recipients. For more information on what happens to your pension when you die, you can refer to guidance from GOV.UK on pensions and death.

2. Pension Sharing in Divorce or Civil Partnership Dissolution

In the unfortunate event of a divorce or the dissolution of a civil partnership, your pension can be treated as a shared asset, similar to property or savings.

• Shared asset: Pensions accumulated during the marriage or civil partnership are often considered joint marital assets, regardless of whose name they are in.
• Pension sharing order: A court can issue a 'pension sharing order' as part of the financial settlement. This legally transfers a specified percentage of one person's pension fund to their former spouse or partner.
• Separate fund: Once a pension sharing order is implemented, the receiving party usually has their own separate pension fund established with the existing provider or transferred to a new provider of their choice. They then control this new fund.
• Legal guidance: Navigating pension sharing requires legal advice, as it is a complex area of family law. You can find general information on pensions and divorce from GOV.UK.

Summary of Pension Beneficiary Scenarios

To clarify the circumstances under which someone else can benefit from your pension, consider the following table:

It is important to seek financial advice when making decisions about your pension, especially concerning nominations or divorce settlements.