Advisers fail to understand rules around expression of wish forms and drawdown options

On average, 64 per cent of advisers are unable to understand the rules around expression of wish forms and beneficiaries’ drawdown options, Curtis Bank has found.

According to Curtis Bank, beneficiaries may be prevented from taking up beneficiaries’ drawdown options because of complex death benefits rules.

When presented with fictional scenarios and expressions of wish forms and asked to identify the forms that allow chosen beneficiaries to opt for drawdown, an average of 36 per cent of advisers gave the correct answer in each scenario.

While advisers were asked to scan complex financial scenarios “very quickly”, said Curtis Bank pension technical manager Jessica List, “it does show that there is still some confusion over how the rules work in practice”.

The research indicated that “there is still some confusion over how the rules work in practice, and a was intended to highlight to advisers that even up to date expressions of wishes can still fall down in the face of unexpected situations,” List added.

Curtis Bank explained that with drawdown being a flexible and tax-efficient option for a number of beneficiaries, the rules do not always permit this as an option. The firm noted: “Generally speaking, anyone named on an expression of wishes will be able to have drawdown, but problems can arise if a different beneficiary is chosen. There is still some confusion over how this works in practice, and what might happen in the event of unforeseen circumstances.”

This can occur whereby a chosen beneficiary also passes away or decides to reject their share of benefits, an alternative beneficiary that is selected by the scheme administrator may not be permitted to have drawdown. As a result, unforeseen circumstances need to be catered for, Curtis Bank has advised.

In order to prevent these complications, investors and advisers can take a proactive approach to protect beneficiaries and the resultant confusion of the process. List detailed: “Firstly, check that there is an expression of wishes in place. A surprising number of people put off making a nomination up front and then simply never get around to it. Secondly, check that the expression of wishes is up to date. Most often, problems arise because the expression of wishes on file is years old and the investor’s situation has changed. Finally, check that the expression of wishes caters for unforeseen circumstances. Make sure that should the worst happen, the expression of wishes will still leave options open for the beneficiaries.”

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