// Source citations for the factual claims in this guide (kept out of the // rendered tree: flow-level MDX comments break Next scroll-on-navigation). export const sources = [ "source: https://www.gov.uk/tax-on-pension-death-benefits retrieved 2026-06-12 (before/after-75 treatment, 2-year rule, DB dependant rules)", "source: https://www.gov.uk/tax-on-your-private-pension/lump-sum-allowance retrieved 2026-06-12 (lump sum and death benefit allowance of £1,073,100)", "source: https://www.gov.uk/government/publications/inheritance-tax-on-pensions-technical-note/technical-note-inheritance-tax-on-pensions retrieved 2026-06-12 (IHT on unused pension funds from 6 April 2027, legislated in Finance Act 2026, Royal Assent 18 March 2026; personal representatives liable; spouse/civil partner and charity exemptions; death-in-service excluded)", "source: https://www.gov.uk/state-pension-through-partner retrieved 2026-06-12 (inheriting State Pension depends on when each partner reached State Pension age)", ];

Guide · 5 minute read

What happens to my pension when I die?

Your defined contribution pot passes to the beneficiaries you nominated, usually tax-free if you die before 75 and taxed as their income if you die at 75 or later. From 6 April 2027, unused pots will also count towards inheritance tax.

Who actually gets the money

A workplace or personal pension does not automatically follow your will. The pot sits in a trust, and the provider or scheme trustees decide who receives it, guided by your expression-of-wish form (sometimes called a nomination or beneficiary form). It is not legally binding, but trustees follow it in the vast majority of cases.

The catch is that most people filled it in once, years ago, or never at all. If yours still names an ex-partner, or nobody, the trustees have to guess at your intentions, which slows everything down and can send money to the wrong person. Checking it takes five minutes on your provider's website or a phone call to your scheme. Do it after every major life event: marriage, divorce, children, bereavement.

The age 75 rule

For defined contribution pots, the tax your beneficiaries pay hinges on your age at death, not theirs.

• Death before 75. Lump sums are normally tax-free up to your remaining lump sum and death benefit allowance, which is £1,073,100 for most people. Money moved into beneficiary drawdown or used to buy an annuity is also paid tax-free. One trap: if a lump sum is paid more than two years after the provider is told of the death, the whole amount becomes taxable, so beneficiaries should not sit on the paperwork.
• Death at 75 or later. Whatever your beneficiaries take, whether lump sum, drawdown income or annuity payments, is taxed as their own income at their marginal rate. A large single lump sum can push a basic-rate beneficiary into higher-rate tax for that year, so spreading withdrawals through beneficiary drawdown often keeps more of the money.

Inheritance tax changes from April 2027

Until now, pension pots have sat outside your estate for inheritance tax, which made them a popular last-spent asset in estate planning. That is changing, and the change is law, not just a proposal: Finance Act 2026 received Royal Assent on 18 March 2026, and for deaths on or after 6 April 2027 most unused pension funds and death benefits will count as part of your estate for inheritance tax.

The important carve-outs: anything passing to a spouse or civil partner remains exempt under the normal spousal exemption, payments to charity are exempt, and death-in-service benefits from a registered pension scheme stay outside the charge. Your personal representatives, not the pension scheme, will be responsible for reporting and paying any inheritance tax due. Income tax can still apply on top if you die at 75 or later, so a pot left to an adult child after 2027 can face both charges.

If a large pension was the centrepiece of your inheritance planning, it is worth revisiting. Spending the pension and leaving other assets may now beat the old advice of preserving the pot, and a life insurance policy written in trust is one way to cover an expected inheritance-tax bill without relying on the pension wrapper.

Defined benefit and State Pension, briefly

A defined benefit (final salary) scheme works differently: there is no pot to pass on. The scheme typically pays a dependant's pension, usually only to a husband, wife, civil partner or a child under 23, at a fraction of your pension set by the scheme rules. That income is taxed as the dependant's income whatever your age at death. Some schemes also pay a lump sum if you die before retiring or shortly after.

The State Pension mostly stops at death. A surviving spouse or civil partner can sometimes inherit part of it, but the rules depend on when each of you reached State Pension age, so check gov.uk for your specific dates rather than assuming anything carries over.

What to do this week

Three quick wins: complete or update the expression-of-wish form on every pension you hold, tell your beneficiaries where your pensions are (lost pots are a genuine problem), and if your estate could face inheritance tax after April 2027, review whether your drawdown plan and protection cover still fit. None of this requires an adviser, though large or complicated estates usually justify one.

Common questions

Do my children pay tax on my pension if I die before 75?

Usually no. Lump sums are tax-free up to your remaining lump sum and death benefit allowance (£1,073,100 for most people), and beneficiary drawdown or annuity income is also tax-free, provided lump sums are claimed within two years of the provider being notified.

Is a pension subject to inheritance tax in the UK?

Historically no, because the pot sat outside your estate. For deaths on or after 6 April 2027, most unused pension funds and death benefits count towards inheritance tax. Funds passing to a spouse or civil partner, payments to charity, and death-in-service benefits remain exempt.

Is an expression of wish form legally binding?

No. The trustees or provider have discretion over who receives the money, but they follow a current, clear nomination in the vast majority of cases. An out-of-date form naming an ex-partner is the more common problem, so update it after every major life event.

Does my wife or husband get my State Pension when I die?

Not the whole thing. The State Pension largely stops at death, though a surviving spouse or civil partner can sometimes inherit a portion depending on when each of you reached State Pension age. Check the gov.uk tool with your specific dates.

What happens to a final salary pension when you die?

There is no pot to inherit. The scheme usually pays a dependant's pension, typically to a spouse, civil partner or child under 23, at a fraction set by scheme rules, and it is taxed as the recipient's income regardless of your age at death.

Guidance and education, not regulated financial advice.