1. The Two Main Types of UK Pension

Before diving in, it helps to know which type of pension you have — because the death rules are very different.

Most people in the UK today have a defined contribution pension through auto-enrolment. If you started a new job in the UK in the last decade and didn’t opt out, you almost certainly have one.

2. Defined Contribution Pensions on Death

Good news: with a defined contribution pension, there is usually a pot of money left behind when you die — and your beneficiaries can inherit it.

If you die before you start drawing your pension

The full value of your pension pot can typically be passed on to whoever you’ve nominated. This is sometimes called the “death benefit” or “lump sum on death.” Provided you die before age 75, this is usually paid tax-free.

If you die after you’ve started drawing your pension

This depends on how you chose to take your pension income:

• Drawdown (keeping the pot invested and withdrawing as needed): Any remaining funds in the pot can be inherited by your beneficiaries. If you’re under 75 at death, it’s tax-free. If you’re 75 or older, beneficiaries pay income tax at their marginal rate on withdrawals.
• Annuity (a guaranteed income for life): Once you die, payments usually stop — unless you purchased a joint-life annuity (which continues paying a surviving spouse) or a guaranteed period annuity (which keeps paying for a set number of years regardless).

3. Defined Benefit (Final Salary) Pensions on Death

Defined benefit pensions work differently. You don’t own a “pot” — you have a promise of income. When you die, that promise largely ends, but there are usually provisions for dependants.

Dependant’s pension

Most DB schemes pay a dependant’s pension to your surviving spouse, civil partner, or in some cases a financially dependent partner or child. This is typically a proportion of the pension you were receiving — commonly 50% — paid to the survivor for the rest of their life.

Lump sum on death in service

If you die while still working (before retirement), most DB schemes pay out a death-in-service lump sum — often 2–4 times your annual salary — to your nominated beneficiaries. This is separate from the dependant’s pension.

Guaranteed period

Some DB pensions include a guaranteed payment period (e.g. 5 or 10 years). If you die shortly after retiring, the pension continues to be paid to your estate or nominees until that period ends.

4. What Happens to the State Pension When You Die?

The State Pension is not a pot of money — it’s a regular income you receive from the government. When you die, your State Pension payments simply stop.

However, your surviving spouse or civil partner may be entitled to:

• Bereavement Support Payment: A monthly benefit available to those under State Pension age when their partner dies. There’s an initial lump sum followed by up to 18 monthly payments.
• Inherited Additional State Pension: If either of you reached State Pension age before 6 April 2016 and built up Additional State Pension (also called SERPS or State Second Pension), some of this may be inheritable.
• Inherited ‘new’ State Pension: Under the new system (post-April 2016), you may be able to inherit up to 50% of your partner’s “protected payment” if they deferred their State Pension or had certain transitional arrangements.

5. Tax Rules: Will Your Beneficiaries Pay Tax?

This is where many people get confused — understandably, because the rules are different for pensions than for everything else in your estate.

Inheritance Tax (IHT)

Defined contribution pension pots are currently outside your estate for inheritance tax purposes. This means the 40% IHT rate that applies to estates over £325,000 does not normally apply to your pension pot. This has historically made pensions a powerful estate planning tool.

Income Tax on inherited pension withdrawals

The key threshold is age 75. Dying before 75 typically means your beneficiaries receive the pension pot completely free of income tax. After 75, they pay income tax at their own marginal rate when they withdraw funds — but the money can still sit in the pension pot and grow tax-free until they choose to withdraw.

6. Expression of Wishes — The Most Important Form You’ve Never Filled In

Here’s something most people don’t know: your pension does not pass through your will. It is entirely separate. Your pension provider decides who receives the death benefits — and they make that decision based on a form called an Expression of Wishes (also known as a Nomination of Beneficiary form).

If you haven’t filled one in, your pension provider has complete discretion over who gets your money. They will usually try to identify your next of kin, but this process takes time, can cause family disputes, and may not reflect your wishes.

What the form lets you do

• Name one or more beneficiaries (e.g. a spouse, children, or anyone else you choose)
• Specify the percentage split between multiple beneficiaries
• Update your wishes at any time if your circumstances change (divorce, new children, etc.)

Note: While pension trustees are not legally obligated to follow your wishes (the form is not legally binding), they take it very seriously and will almost always honour it. The discretionary nature of the form is what keeps the pot outside your estate for IHT purposes.

7. Special Considerations for Immigrants in the UK

If you’ve moved to the UK from another country, there are a few extra things to think about when it comes to pension death benefits.

Pensions from your home country

If you contributed to a pension in your country of origin before moving to the UK, those pensions are governed by the rules of that country — not UK law. Death benefit rules will vary significantly. Make sure you’ve nominated beneficiaries in those schemes too, and check whether a double taxation agreement between the UK and your home country affects how the benefits are taxed.

UK National Insurance contributions

Your entitlement to the State Pension — and therefore your surviving partner’s potential inheritance — depends on how many qualifying years of National Insurance (NI) contributions you have. You generally need 10 years for any State Pension, and 35 years for the full amount. Years worked abroad may count through international agreements in some cases.

Residency status of your beneficiaries

If your nominated beneficiaries live outside the UK, they can still receive a pension death benefit — but the tax treatment can be complicated. Payments may be subject to withholding tax or taxed in the beneficiary’s country of residence under international tax rules. This is particularly relevant if you are sending money to support family back home.

8. What to Do Right Now — Your Action Checklist

Don’t leave your pension death benefits to chance. Here’s what to do today:

• Find out what type of pension(s) you have — check your payslip, HR portal, or contact your employer
• Log in to each pension provider’s website and complete or update your Expression of Wishes / Nomination of Beneficiary form
• Check whether you have an annuity — and if so, whether it’s joint-life or has a guaranteed period
• If you have a DB pension, read your scheme’s death benefits summary to understand what your dependants would receive
• Consider writing a will (pensions sit outside it, but everything else in your estate doesn’t)
• If you have overseas pensions, contact those providers too and update beneficiary nominations
• Speak to a regulated financial adviser if your estate is complex or the upcoming IHT changes could affect you

9. Frequently Asked Questions

The Bottom Line

Your pension can be one of the most valuable assets you leave behind — but only if you’ve taken the right steps. The single most important action is completing your Expression of Wishes form with every pension provider you have. It takes five minutes and ensures the money goes to the right person.

Beyond that, understand what type of pension you have, keep an eye on the upcoming inheritance tax changes in 2027, and consider speaking to a regulated financial adviser if your situation is complex.

If you found this guide helpful, explore more of our UK finance content below — whether you’re building your savings, managing tax, or planning for the future.