What Happens to My Pension When I Die?

It depends on your pension type and your nomination forms. Most pension death benefits pass outside your will — the pension scheme decides who gets them based on who you've nominated.

This is one area where your will often doesn't control what happens. Here's what you need to know and do.

The Key Point: Nominations Matter

Most pension death benefits are paid at the scheme's discretion, guided by your "expression of wish" or nomination form. This means:

• Your will usually doesn't control who gets your pension
• If you haven't completed nomination forms, the scheme decides
• An outdated nomination (naming your ex) could mean they get the money

Action: Check and update your pension nominations NOW.

Defined Contribution Pensions

Most workplace pensions and personal pensions are "defined contribution" — you build up a pot that buys benefits.

If You Die Before 75

• Lump sum: Usually tax-free to beneficiaries
• Drawdown: Beneficiaries can take as tax-free income
• Annuity purchase: Beneficiaries can buy their own annuity tax-free

If You Die After 75

• Lump sum: Taxed at beneficiary's marginal rate
• Drawdown: Taxed as income when they withdraw
• Annuity: Taxed as income

Who Gets It?

• Whoever you've nominated (if discretionary trust scheme)
• Your estate if no nomination and scheme allows
• Spouse/dependants typically prioritised

Defined Benefit (Final Salary) Pensions

These work differently — you get a guaranteed income rather than a pot.

Typical Death Benefits

• Spouse's pension: Usually 50% of your pension for their lifetime
• Children's pension: Until age 18 or 23 if in education
• Lump sum: Often 2-4 times your salary if you die in service
• Guarantee period: If you die soon after retiring, remaining guaranteed payments go to beneficiaries

What You Can't Do

• Leave the scheme pension to just anyone — usually spouse/dependants only
• Inherit the pot — there isn't one, just the income stream
• Avoid tax — spouse's pension is taxable income

State Pension

The State Pension generally dies with you. However:

• Spouse may inherit some: If you haven't claimed your full entitlement, surviving spouse may get extra
• Old rules: Pre-2016 rules had more generous survivor provisions
• No lump sum: State Pension doesn't have a pot to pass on

How to Update Your Nominations

Find Your Pensions

1. Current workplace pension
2. Previous workplace pensions
3. Personal/SIPP pensions
4. Old stakeholder pensions

Use the Pension Tracing Service (gov.uk) if you've lost track.

Request Nomination Forms

• Contact each pension provider
• Ask for death benefit nomination form
• Often available online

Complete and Return

• Name your preferred beneficiaries
• Specify percentages if multiple people
• Include backup beneficiaries
• Keep a copy for your records

Review Regularly

• After marriage, divorce, or relationship changes
• After births or deaths in the family
• Every few years as a routine check

Common Problems

Ex-Spouse Still Nominated

Divorce doesn't automatically update pension nominations. Your ex could receive your death benefits. Update your forms immediately after separation.

No Nomination at All

Without a nomination, the pension scheme decides based on their rules. They'll usually look to spouse, then children, then parents. This may not match your wishes.

Unmarried Partner

Cohabiting partners often aren't recognised as automatically entitled. You must nominate them specifically, or they may receive nothing.

Conflicting Will and Nomination

Your will says everything to your children, but your pension nomination says everything to your partner. The nomination typically wins — pension benefits aren't controlled by your will.

Tax Planning Opportunities

Death Before 75

If you die before 75 with an uncrystallised (untouched) pension pot:

• Beneficiaries receive tax-free
• Better than receiving via your estate (potentially taxed)
• Consider drawing other assets first, leaving pension intact

Passing On Pensions

Defined contribution pensions can be very tax-efficient to pass on:

• Often outside inheritance tax
• Can stay in pension wrapper
• Beneficiaries draw down as needed

Annuities

If you buy an annuity:

• Single life: Stops when you die, nothing passed on
• Joint life: Continues paying spouse (reduced rate)
• Guaranteed period: Pays for set years even if you die early

What to Do Now

1. List all your pensions — current and previous
2. Check current nominations — contact each provider
3. Update where needed — especially if divorced or in new relationship
4. Coordinate with will — ensure consistent planning
5. Tell your family — so they know where pensions are

The Old Way vs Our Way

The Old Way	Our Way
Assume the will covers everything	Know that pensions pass outside the will
Complete nomination once, forget forever	Review nominations after life changes
Let the scheme decide	Make your wishes explicitly clear
Miss tax-efficient opportunities	Plan pensions as part of overall estate