Your custom pistol needs to know about the new dissolve Material in order to make use of it. You can assign it to your custom pistol to force it to be used.
Double Click the GrenadeGunPistol Blueprint to open it in the Blueprint Editor.
Select GrenadeGunPistol(self) in the Components panel
In the Details panel search for Dissolve to easily find the Dissolve Material property.
Click the dropdown menu for the Dissolve Material property to show the Asset Picker and select GrenadeGun_Dissolve_MI. You can use the search box to quickly filter the list.
In the Blueprint Editor toolbar, click Compile to update the Blueprint and click Save to preserve your changes.
That's it, the GrenadeGunPistol, when it is destroyed, will now dissolve to red instead of blue.