More than 750,000 people coming up to retirement are at risk of passing their pension to the wrong person when they die, according to research from Royal London.
The analysis found some 773,000 people aged between 55 and 64 who are in at least their second relationship and may be affected by this issue.
The problem arises where savers have told a pension scheme they want any payments after their death to go to a first spouse but then divorce, remarry or form a new partnership.
Unless the paperwork is updated, there is a risk any benefit after their death goes to the ex-partner.
Helen Morrissey, personal finance specialist at Royal London, said: "Over the course of our lives, many of us will be in a number of different relationships.
"The person we want to receive any pension benefits after we are gone is likely to change over time. But if we have not told all of our past pension schemes about our new wishes and our new circumstances, there is a risk that the wrong person will stand to gain.
"It is important that people make sure that all of this information is kept up to date."
The average person is expected to have 11 different jobs during their working life and could easily have as many different pension arrangements.
When joining a pension scheme, members are asked to fill out an ‘expression of wishes’ form which outlines who should receive any death benefits.
Trustees and pension providers will consult these forms when deciding how to allocate pension death benefits, alongside consulting wills and speaking to family members.
But these forms are often not updated to reflect people’s changing personal circumstances, such as divorce or remarriage, meaning an ex-partner could be in line to receive pension death benefits, the provider warned.
While scheme trustees and providers will make efforts to consult the deceased’s will, speak to colleagues and family, it can be difficult to find these people when the individual has not worked for that company for many years.
That could mean the pension goes to an ex-partner when the deceased could well have been living with, and had a family with, someone else, the provider added.
Royal London published a guide yesterday (25 February) which explains the different sorts of pension benefits which can be payable when someone dies, and how to make sure the right person gets them after their death.
maria.espadinha@ft.com
