What is a defined contribution pension?
A defined contribution pension builds a pot from contributions plus investment returns. The value at retirement depends on what was paid in and how the investments performed, and the member carries the investment risk. Benefits can normally be taken from age 55, rising to 57 from April 2028.
At retirement the options are drawdown, an annuity, taking uncrystallised lump sums, or a combination. Broadly 25% can usually be taken tax free, subject to the lump sum allowance, with the rest taxed as income.
On death, the pot passes according to the scheme's rules and the member's nomination, at the trustees' discretion — not under the will. That discretion is what has historically kept pensions outside the estate for inheritance tax.
That changes from April 2027, when unused pension funds come within the scope of inheritance tax. It does not make nominations irrelevant; it makes them more consequential, because they still determine who receives what.