What is the purpose of a beneficiary nomination?

• A. Directs who receives death benefits and can affect tax efficiency and security for dependants.
• B. Directs investment allocation during life.
• C. Increases the amount of pension contributions.
• D. Prevents any changes to the pension upon death.

Answer: (A)

A beneficiary nomination is the instruction you give your pension provider about who should receive the death benefits when you die. This matters because the payout from a pension on death is typically distributed as a lump sum, a dependant’s pension, or other payments, and choosing who gets it can help ensure dependants are financially supported and can influence the tax treatment of those payments. It focuses on who benefits after death, not on how you invest funds during life or on increasing your contributions. And while you can usually update or change the nomination, it’s the chosen recipients who will be considered for the payout, subject to the scheme’s rules.