What happens to a pension when someone dies depends on the type of pension and, in some cases, how old the person was when they died. Pensions can be one of the most valuable things passed on, so it is worth understanding the rules. This guide covers workplace and personal pensions, the State Pension, and an important inheritance tax change coming in 2027.
What happens to a defined contribution pension?
A defined contribution pension is a pot of money built up over time. When the holder dies, any money left in the pot passes to the people named on their expression of wish (beneficiary nomination) form. If the person died before age 75, the money can usually be paid to beneficiaries tax-free. If they died at 75 or over, beneficiaries pay income tax at their own rate on what they take out.
What happens to a defined benefit (final salary) pension?
A defined benefit scheme pays a guaranteed income rather than a pot. When a member dies, the scheme often pays a reduced survivor’s pension to a spouse, civil partner or dependant — commonly around half of the member’s pension, though this varies by scheme. Some schemes also pay a lump sum if the member dies within a set period. Check the scheme rules for the exact terms.
Can you inherit someone’s State Pension?
It depends on when each of you reached State Pension age and the type of State Pension involved. A surviving spouse or civil partner may be able to inherit an extra or protected payment in some circumstances. For context, the full new State Pension is £241.30 a week in 2026/27. Contact the Pension Service to check what you may be entitled to.
How does inheritance tax affect pensions from 2027?
This is a significant change. From 6 April 2027, most unused pension funds and pension death benefits will be counted as part of your estate for inheritance tax. Money passing to a spouse or civil partner, or to a registered charity, is excluded, and death in service benefits from a registered scheme are also excluded. If you have a large pension, it is worth reviewing your plans before this takes effect.
What should you do now?
Make sure every pension has an up-to-date expression of wish form naming who you want the money to go to. Trustees rely on this form, so review it after any major life change such as a marriage, divorce or new child.
Frequently asked questions
Who gets my pension when I die?
For a defined contribution pension, the people named on your expression of wish form. For a defined benefit scheme, usually a spouse, civil partner or dependant under the scheme rules.
Is an inherited pension taxed?
For deaths before age 75 a defined contribution pot is usually tax-free; from age 75 the beneficiary pays income tax at their own rate. From April 2027 pensions may also count towards inheritance tax.
How do I claim a loved one’s pension?
Contact each pension provider and the Pension Service for the State Pension. They will explain what they need, usually including the death certificate.
How Solace Care can help
Pensions are easy to overlook among everything else after a death. Solace Care helps you find and track each provider, claim, and deadline in one place. Want help with the practical side after a death? Create a Solace Care account or read more guides.
