What will happen to your pension when you die can be very different depending on the type of pension you are invested in. If, for example, you have a defined benefit scheme, the scheme may continue to pay your salary to your spouse after you are gone. Please check with your relevant scheme provider if you are not sure.

If you still have money in your pensions when you die, there are a number of options as to how it can be paid out to your beneficiaries.

If you have not accessed your pension when you die, your beneficiaries can usually withdraw all the money as a lump sum, or they can set up a flexible retirement income.

If you have chosen to take a flexible income and you are in pension drawdown when you die, your beneficiaries can take the remaining money as a lump sum, or continue with the flexible income.

The tax position may also change depending on how old you are when you die.

In most cases, currently any pensions you have can be passed on outside of your estate and therefore won’t be subject to Inheritance Tax. However, for this to be the case, you should submit an ‘expression of wish’ form to us. This will enable us to instruct the trustee of the pension. Please note that the scheme administrator doesn’t have to follow your wishes though generally they will.

NOTE: As of 6 April 2027, your pension will no longer fall outside of your estate. This means that any unused pensions benefits exceeding available IHT thresholds would form part of your taxable estate, unless the IHT exemption on transfers to a spouse or civil partner applies.