Splitting A Pension Between Two People: What Goes Wrong

Yes — you can nominate more than one person for your pension, and you divide the pot between them by percentage on a single form. Naming two children, or a partner and a child, or three grandchildren, is completely ordinary, and most modern nomination forms are built to take several names at once. The only hard rule on the form itself is that the percentages add up to 100.

But the form is deceptively simple, and it does not ask the two questions that decide whether your split actually holds together. The first is what happens to a person's share if they die before you do — because the form does not quietly hand that share to the others. The second, from April 2027, is why one half of the very same pot can pass completely free of tax while the other half is pulled into your estate and taxed. A tidy 50/50 split can reach the two people you treated as equals in two very unequal amounts.

This page works the arithmetic properly: how the percentages behave once they leave your hand, what becomes of an orphaned share, and why the tax can land on one beneficiary and not the other. It assumes a defined contribution pension — a pot of money you have built up — because that is the kind of pension you nominate beneficiaries for. A final salary scheme pays its survivors under its own rules, and splitting it by percentage is not usually something you can do.

The short answer: yes, and you split it by percentage

The document goes by several names — a nomination form, an expression of wish, a beneficiary nomination — and they all do the same job. You list the people you want to benefit, and you write a percentage against each name. The percentages must total 100, and beyond that you have a free hand: you can name one person, or five, in whatever proportions you choose. You can change it as often as you like, at no cost, for the rest of your life.

What matters is understanding what that form is, and what it is not. On a typical private or workplace defined contribution pension, the pot is held under a discretionary trust. When you die, the trustees or provider decide who to pay, and they treat your nomination as the single strongest piece of evidence of your wishes. In the overwhelming majority of cases they simply follow it. But they are guided by it rather than commanded by it, and that distinction is precisely why keeping the form current matters so much — a good, recent nomination is the difference between a quick, clean payment and a slow discretionary enquiry into your family.

How the percentages actually work on the form

In practice the mechanics are straightforward. You give each person's full name, usually their date of birth and their relationship to you, so the scheme can identify them without ambiguity years later. Against each you write a whole-number percentage. A couple leaving everything between two children might write 50 and 50; a parent wanting to weight it might write 60 and 40; three grandchildren might be 34, 33 and 33. Keep a copy, and make sure the scheme has the latest version — an old form on file beats no form, but the most recent dated one is what counts.

It is just as important to be clear about what the percentages do not do. They do not create a legal gift the way a line in a will does. They do not override the trust or force the trustees' hand. And, crucially, they say nothing at all about what should happen if the split cannot be carried out as written — if one of the people named is no longer alive when you die. The form treats your family as a snapshot on the day you signed it, and life does not stand still.

The question the form never asks: what happens to an orphaned share

This is the gap that catches people, and almost no nomination form warns you about it. Suppose you name your two children, 50% each. Years later one of them dies before you do, and you never update the form. It is natural to assume the surviving child now simply receives the whole pot. That is not what happens.

The deceased child's 50% becomes an orphaned share. It does not roll up automatically to the survivor, because the form never told the scheme to redistribute it that way. Instead that half falls back into the trustees' discretion. They will look at your circumstances as they stood at your death, gather what they can about your family and dependants, and decide where the orphaned share goes. It might reach the surviving child in the end. It might go to a grandchild, or into your estate, or somewhere you would never have chosen. The point is that you have handed the decision to someone else at the worst possible moment.

Some nomination forms let you guard against this directly, with an "in default" instruction or a substitute beneficiary — a line that says, in effect, "if this person dies before me, their share goes to that person instead." If your form offers it, use it. But the simplest and most reliable protection costs nothing: the moment anyone named on a nomination dies, review every form that mentions them. A split that made sense with two living children rarely still makes sense with one.

Why one half of the same pot can be taxed and the other not

Here is where an evenly split pot stops being even. From 6 April 2027, unused defined contribution pension funds are brought into your estate for inheritance tax. The long-standing spouse and civil partner exemption is preserved — so a share passing to a husband, wife or civil partner remains free of inheritance tax. A share passing to anyone else does not get that shelter, and is chargeable to inheritance tax above whatever nil-rate band your estate has left.

Take the couple who wanted to be fair: half of the pot to a second wife, half to an adult son from a first marriage. After April 2027 the wife's half is exempt. The son's half is counted in the estate and can be taxed at the standard inheritance tax rate. The form said 50/50; the tax does not.

Source: HM Treasury and HMRC, Inheritance Tax on unused pension funds and death benefits (2027-28), published on GOV.UK, standard inheritance tax rate of 40% above the available nil-rate band.

There is a second tax layer sitting underneath that one, and it turns on your age when you die. If you die before 75 and the benefit is paid or designated to the beneficiary within two years, it is generally free of income tax. If you die at 75 or over, whoever receives your pension pays income tax on what they draw at their own marginal rate — so the same inherited share can leave a basic-rate beneficiary with far more than a higher-rate one. We set out that split in detail in what your children are left with after tax when you die at 76, and the clock that governs the income-tax-free window in the two-year deadline to pay a pension death benefit. Between the inheritance tax exemption and the marginal-rate income tax, two people you named at the same percentage can end up with markedly different sums.

The form governs the pot, not your will

A common and expensive mistake is to assume your will controls the pension. On a pension held under a discretionary trust, it does not. The pot sits outside your estate and is paid under the scheme rules and the trustees' discretion, steered by your nomination — not by your will. This is usually a good thing: it keeps the money away from probate delays and away from creditors, and it can get funds to your family quickly. But it means your will and your nomination are two separate documents that must be read together. A will leaving "everything to my wife" does nothing to redirect a pension whose form still names an ex-partner.

It also means you should think hard before doing anything that pushes the pot into your estate — naming "my estate" on the form, or leaving the form blank so the trustees have no individual to pay. Money that lands in the estate loses the speed and the tax advantages of a direct payment, and is then shared out under your will or, if there is none, the intestacy rules. The parallel with property is close: where a home is held as tenants in common, a dead owner's share passes under the will rather than to the co-owner, and families are often surprised by where a deceased owner's half share actually goes. A pension left to the estate behaves in much the same way, when a direct nomination could have avoided the whole detour.

What else can still go wrong, and the gap worth checking

Even a well-drafted split can be undone by things the form does not show you. Most people have more than one pension — an old workplace pot, a personal pension, a current scheme — and each needs its own nomination. A perfect form on one pot does nothing for another. If you ever opted out of a workplace pension, there may be no pot and no death benefit there to split at all, which is not always obvious to the family left behind.

Unmarried partners are the most exposed. Naming a partner on the form helps enormously, but on some schemes it is not the whole story: the trustees may still expect proof of a genuine, financially interdependent relationship before they pay. A partner who assumed the form was enough can find themselves having to evidence years of shared life at the worst time, as we describe in the case of a man who died unmarried while his partner lived on his wages.

If splitting the pot on paper shows you a gap — an unmarried partner who might struggle to qualify, a pot too small to do the job, or tax set to take a slice of a child's share — life cover is the cleaner tool for that specific problem. A policy written in trust pays a chosen person directly, outside the pension rules and outside the estate, in the amount you decide. If that is where your split has led you, you can get life insurance quotes and have an FCA-authorised broker price cover against the exact shortfall. For free, impartial guidance on the pensions themselves, MoneyHelper is government-backed and does not sell anything.

Scotland and Northern Ireland

The nomination-and-discretion machinery is the same across the UK: a defined contribution pension held under a discretionary trust is paid under the scheme rules wherever in the country you live, and the percentages you write behave the same way in Glasgow as in Cardiff. What differs is what happens if the money ends up in the estate rather than reaching a named person directly.

In Scotland, a surviving spouse and children have legal rights over part of the deceased's moveable estate that apply regardless of what a will says, so money that falls into a Scottish estate can be claimed in ways that would not arise in England and Wales. In Northern Ireland the intestacy and succession rules differ again. None of this touches a pension that is paid outside the estate on a current nomination — which is one more reason to keep the form up to date and keep the pot out of the estate in the first place. You can read the rest of this topic in our guide to pensions, nominations and death benefits.

Frequently asked questions

Can I name more than one pension beneficiary?

Yes. Most defined contribution nomination forms let you name several people and allocate a percentage to each, and the percentages should total 100. You can change the split whenever you like, at no cost, and it is sensible to review it after any significant change in your family — a birth, a death, a marriage or a divorce — rather than signing it once and forgetting it.

What happens if one of the people I named dies before me?

The form does not automatically redistribute that person's share to the others. Instead the orphaned share falls back into the trustees' discretion, and where it goes may not match what you would have chosen. Some forms let you name a substitute or set an "in default" instruction to cover it. Otherwise the safest step is to update the nomination as soon as you know, rather than leaving the gap unaddressed.

Can two beneficiaries be taxed differently on the same pot?

Yes. From 6 April 2027 a share passing to a spouse or civil partner is covered by the inheritance tax exemption, while a share to anybody else is not and can be taxed in the estate. Income tax then depends on each recipient's own marginal rate where the member died at 75 or over. So two people you named at the same percentage can receive very different net amounts.