What happens to my pension when I die?

Bob is married to Mary and they have a daughter Kate. Bob has chosen the nominated beneficiary option and has decided to leave 50% of his pot to Mary and 50% of his pot to Kate.

Scenario One

Bob passes away before taking his money out of Nest. In this scenario the retirement pot was paid out to Mary and Kate because Bob chose to make them nominated beneficiaries. Also, because he chose to nominate beneficiaries the pot was included in the calculation of inheritance tax.

Scenario Two

Bob and Mary get divorced. A few years later Bob gets married to June and they have a son Harry.
Bob dies without updating his nominated beneficiaries.
In this scenario the money will still be paid to his first wife Mary and their daughter Kate.
His second wife June and their son Harry would receive nothing, because by choosing the nominated beneficiary option and then not keeping his beneficiaries up to date, the money will be paid to the beneficiaries originally named by Bob.

John is married to Sarah. John has chosen the expression of wish option and has decided to leave all of his pot to Sarah.

Scenario One

John passes away and because he decided to make an expression of wish his retirement pot was free from any inheritance tax.
In this scenario the Trustee decided to pay the benefits in line with John’s request.

Scenario Two

John and Sarah get divorced. A few years later John gets married to Helen and they have a son Arthur.
If John dies without updating his beneficiaries, Nest will obtain all the relevant information about John’s circumstances. This includes details of his current wife and all his children to aid the decision of whether the money should be paid to Sarah or not, in which case it will usually be paid to John's estate.
Nest could decide that in the circumstances the money should be added to his other possessions which form part of his estate, to be distributed accordingly. The money in the pot would usually be free from inheritance tax calculations.