What happens to my pension when I die?
What Happens to My Pension When I Die?
It’s natural to think of pensions as part of your retirement plan - but they can also play a role in what you leave behind. Whether you’re still saving or already drawing an income, it’s important to understand what happens to your pension when you die, and how it could support your loved ones.
In this guide, we explain how different types of pensions are treated after death, how to make sure your wishes are followed, and what tax rules may apply.
Defined Contribution Pensions
If you have a defined contribution pension - where you build a pot through contributions and investment - what happens after your death depends on a few things: your age, your pension provider, and whether you’ve started drawing any income.
Before age 75
If you die before your 75th birthday, and your pension provider is notified within two years, your pension can usually be passed to your chosen beneficiaries tax-free, whether as a lump sum or as income.
After age 75
If you die after turning 75, your beneficiaries will still be able to access your pension, but it will be subject to income tax at their marginal rate.
You can usually choose whether your beneficiaries receive the money as a lump sum, as a regular income, or by keeping it invested in drawdown.
Defined Benefit (Final Salary) Pensions
If you have a defined benefit pension, such as a final salary scheme, what happens after death depends on the scheme rules.
Typically, these pensions do not offer a pot of money to pass on. Instead, they may provide:
A spouse’s or civil partner’s pension, usually a percentage of your pension income
In some cases, a dependant’s pension (for children or other dependants)
A lump sum if you die before retirement or within a set period after retiring
It’s essential to check with your scheme provider to understand what your specific policy includes.
State Pension
The State Pension does not continue after your death. However, depending on your National Insurance record and your partner’s circumstances, they may be entitled to:
Bereavement benefits
A possible State Pension top-up if you were married or in a civil partnership
You can check eligibility and entitlements on the government website or speak to an adviser for help understanding your situation.
To make sure your pension goes to the right person, it’s vital to nominate your beneficiaries. This is sometimes called an Expression of Wish.
This tells your pension provider who you’d like your pension to go to. While it’s not legally binding, providers will usually follow your wishes unless there’s a strong reason not to.
You can usually update your nomination through your provider’s online portal or by completing a form. It’s a good idea to review it regularly - especially after major life events like marriage, divorce, or the birth of a child.
Pension and Inheritance Tax
Pensions are usually not considered part of your estate for inheritance tax purposes. This means that, unlike savings or property, your pension can be passed on outside of your estate, helping to preserve more wealth for your loved ones.
However, tax may still apply depending on when you die and how your beneficiaries access the funds.
As with any financial decision, it’s worth seeking professional advice to understand your specific circumstances and minimise the tax burden where possible.
The Government is currently reviewing this regulation at present and it is being proposed that any unspent Defined Contribution pension funds could be subject to inheritance tax after 6th April 2027.
Final Thoughts
Your pension doesn’t just support your retirement - it can also provide for the people you care about after you’re gone. Whether you're actively saving or already retired, making a plan for your pension after death can give you peace of mind and help your family at a difficult time.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Inheritance tax planning and Trusts are not regulated by the Financial Conduct Authority.
Approved by InPartnership FRN 192638 August 2025