What Happens to My Pension When I Die?

If you've come to this page because someone close to you has died, we're sorry for your loss, and we want to say clearly at the outset: nothing here needs to be sorted out today. Pension providers understand that families need time, and most of the practical steps below can happen at whatever pace feels manageable. This guide simply explains, in plain language, what typically happens to a pension when the person who held it dies — so that when you do feel ready to make calls and fill in forms, you have a sense of what to expect.

The honest, slightly unsatisfying answer to "what happens to my pension when I die?" is that it depends. It depends on the type of pension involved — broadly, whether it's a defined contribution (DC) pot or a defined benefit (DB) scheme. It depends on the age the person had reached when they died, because of an important tax rule around age 75. And it depends on whether they'd told the scheme who they wanted to benefit, through what's usually called an expression of wishes or nomination form. We'll take each of these in turn.

It starts with the type of pension

Most people in the UK will have one or both of two broad types of pension. A defined contribution pension is essentially a personal pot of money, built up from contributions (and any employer contributions) plus investment growth over the years — this includes most workplace auto-enrolment pensions, SIPPs, and older personal pensions. A defined benefit pension, most commonly a final salary or career average scheme, instead promises a specific income in retirement based on salary and length of service, with the employer or scheme bearing the investment risk rather than the individual. These two types are treated very differently when someone dies, which is why it's worth checking which kind of pension is involved before assuming anything about what happens next.

Defined contribution pensions: what usually happens

With a DC pension, the pot that remains when someone dies is usually paid out to whoever they nominated on their expression of wishes form. This isn't always a legal requirement on the scheme's part — most DC schemes hold death benefits in a discretionary trust, meaning the trustees or scheme administrators technically retain the final say — but in practice, nominations are followed in the vast majority of cases. If no nomination was ever made, or the people named have themselves died, the scheme will use its discretion to decide who should receive the money, usually working through the deceased's known family circumstances.

The money itself is typically paid in one of two ways: as a single lump sum, or as "nominee's drawdown," where the beneficiary keeps the pot invested and draws an income from it over time, much like the original pension holder could have done. Nominee's drawdown can be a useful option because it lets a beneficiary spread withdrawals — and any associated tax — over several years rather than taking everything at once. Not every scheme offers full drawdown flexibility, though, so it's worth asking the specific provider what options are available.

Defined benefit pensions: what usually happens

DB schemes work quite differently. Rather than paying out a nominated person's choice of lump sum or drawdown, most DB schemes pay a spouse's, civil partner's, or dependant's pension according to fixed rules written into the scheme itself — often a fraction (commonly half) of the pension the member was receiving or had built up. This ongoing pension is usually paid regardless of any nomination form, because the scheme rules themselves define who counts as an eligible dependant and how much they receive.

Many DB schemes, and especially employer death-in-service arrangements, also pay a lump sum on top — commonly expressed as a multiple of the member's salary, such as three or four times annual pay if they died while still employed and before retirement. This lump sum is usually where a nomination or expression of wishes does come into play, since the lump sum element is often held in the same kind of discretionary trust structure as a DC pension, even though the ongoing pension itself is not.

DC vs DB pension death benefits at a glance

The crucial age-75 distinction

For DC pensions specifically, the age the person had reached when they died makes a real difference to how much tax the beneficiary pays. Broadly speaking, if death occurred before age 75, benefits can typically be passed on completely free of income tax, whether taken as a lump sum or through drawdown, subject to certain allowances. If death occurred at or after age 75, beneficiaries generally pay income tax at their own marginal rate on whatever they withdraw from the inherited pension, whether as income or as a lump sum. This single age threshold is one of the most important — and most commonly misunderstood — details in this whole area, so we've written a dedicated, more detailed explanation of the age-75 rule for pension death benefits, including a worked example.

Why most pensions currently sit outside your estate

One reason pensions have long been seen as an efficient way to pass on wealth is that most DC pensions are held in a discretionary trust structure, which means they generally sit outside the deceased's estate for probate and inheritance tax (IHT) purposes. In practice, this has meant a pension pot could often be passed to a chosen beneficiary without adding to the IHT bill on the rest of the estate, and usually without needing to wait for probate to be granted, since the trustees can often release money more quickly than the formal estate administration process allows.

This is changing, however. From April 2027, most unused pension funds and certain lump sum death benefits will be brought within the deceased's estate for inheritance tax purposes for the first time — a genuinely significant shift for anyone doing bereavement or estate planning involving a pension. It sits alongside, rather than replaces, the age-75 income tax rule described above, so a beneficiary may in future need to think about both income tax and inheritance tax implications together. We've written a full explanation of what this means specifically for death benefits on our pension death benefits and IHT from 2027 page, and a deeper technical dive at our dedicated 2027 IHT changes guide.

A worked example: two different pensions, two different outcomes

It can help to see how these rules play out side by side. Imagine David, aged 68, who had a DC workplace pension worth £90,000 and a smaller DB pension from an earlier employer paying him £4,000 a year. When David dies, his DC pot of £90,000 is paid to his partner, whom he'd named on his expression of wishes form some years earlier, and because he died before age 75, she receives it completely free of income tax — she chooses to keep it in drawdown rather than take it all as a lump sum, so it can continue growing and she can draw from it gradually. His DB pension, meanwhile, converts automatically into a dependant's pension for his partner under the scheme's own rules, paying her roughly £2,000 a year (a fairly typical 50% spouse's pension) for the rest of her life, entirely separate from any nomination he might have made. Two pensions, two very different mechanics, but both ultimately supporting the same person.

Now imagine the same David had instead died at age 78. The DC pot would still go to his nominated partner, but this time she would pay income tax at her own marginal rate on whatever she withdraws from it, whether as a lump sum or as income through drawdown — a materially different outcome purely because of when he died relative to his 75th birthday. The DB dependant's pension, by contrast, would be unaffected by his age at death; it simply continues to be paid as a taxable income under the scheme's normal rules, just as it would have been at any age. This contrast is exactly why the age-75 rule deserves its own closer look, which you'll find on our dedicated page.

What about life assurance, death-in-service, and the State Pension?

Pensions are often only one part of the picture. Many employers provide life assurance or death-in-service cover alongside a workplace pension, sometimes automatically and at no cost to the employee, paying out a lump sum — commonly two to four times salary — completely separately from any pension pot. It's easy to overlook this if you're focused on tracking down pension paperwork, so it's worth checking payslips, contracts, or an employer's HR team specifically about death-in-service cover, as these benefits aren't always well advertised and can sometimes go unclaimed simply because nobody thought to ask.

The State Pension works differently again, and isn't covered in detail on this page, but broadly it is not inherited in the same way as a workplace or personal pension — there is no pot to pass on, though a surviving spouse or civil partner may in some circumstances inherit an additional amount based on their partner's National Insurance record, particularly under the older basic State Pension rules. If the person who died was receiving a State Pension, it's important to notify the Department for Work and Pensions promptly, both to stop payments and to check whether any survivor entitlement applies.

Common questions families ask

A few questions come up again and again from people in exactly your position. Does it matter if the pension was quite small? Generally no — the same rules and options apply regardless of pot size, though very small pots sometimes have simplified payment processes that make things quicker. Can more than one person be named as a beneficiary? Yes, most expression of wishes forms allow the pension holder to split benefits between several people in whatever proportions they choose. What if the deceased had lost track of an old pension entirely? This is surprisingly common — the government's free Pension Tracing Service can help identify old workplace pensions using an employer's name, even where paperwork has long since been lost.

Another frequent worry is timing: how long will it take to receive anything? This varies considerably by provider and by how quickly the required paperwork can be supplied, but it's rarely instant — a matter of weeks is typical for straightforward DC claims once a death certificate and any nomination details have been provided, while DB dependant's pensions sometimes take a little longer to set up as ongoing payments, though back-payments to the date of death are usually included once everything is confirmed.

Practical first steps for a bereaved family member

Dealing with pensions is rarely the first thing anyone wants to think about after a death, and there is usually no strict deadline that requires you to act within days. That said, a few practical steps tend to make the process smoother once you do feel ready to begin:

• 1

  Notify each pension provider or scheme as soon as you reasonably can. Most people have more than one pension — old workplace schemes, a current employer's scheme, perhaps a personal pension — and each one needs to be told separately.

• 2

  Have a death certificate ready. Providers will almost always ask for an original or certified copy before they can process a claim, so it's worth ordering a few extra copies from the outset if you haven't already.

• 3

  Check for life assurance or death-in-service benefits. Many employers provide these automatically alongside a workplace pension, and they're easy to overlook if you're only thinking about the pension pot itself.

• 4

  Gather any paperwork you can find — annual statements, policy numbers, provider correspondence — even if it's incomplete. Providers can usually trace a policy from a name and date of birth alone if paperwork is missing.

• 5

  Ask each provider directly what they need from you and what the likely timescale is. Processes vary a great deal between providers, and asking early avoids unnecessary back-and-forth later.

• 6

  Don't feel pressured to make quick decisions about lump sums versus drawdown, or how to use any money received. Most schemes allow a reasonable window to consider your options, and it's worth taking that time.