What is a pension beneficiary?

Your pension provider will decide who inherits any remaining pension savings after you die. If you’ve nominated a pension beneficiary, this will give the provider a clearer idea of who you’d like your money to go to and will help them honour your wishes.

If you’ve bought a guaranteed income (an annuity) with your pension savings, what happens to your savings depends on the type of income you’ve chosen. For example, you could choose a single-life income which will end when you die, or a joint-life income that will continue to pay your partner or spouse after you’re gone.

Who gets my pension when I die?

In most situations, your pension will be passed down to a person, people or organisation of your choice. We call these your beneficiaries.

Your pension is passed down separately to your estate and any will you may have in place. Because of this, we need to know who you want to receive your pot. If you provide beneficiary details, this gives us a clear idea of who you’d like your money to go to after your death.

What we do after your death

All People’s Partnership pensions are looked after by Trustee Boards. When a member dies, the Trustees have the discretion to decide who will receive a lump sum payment. They have a duty to do their best to find out who should receive the member’s pot after their death.

The Trustees will check if the member has named beneficiaries, then look at financial dependency and family members.

Will my pension beneficiaries get taxed?

Tax on inheriting a pension pot varies depending on the type of pension and the age of the pension owner who passed away.

We recommend checking the details of the pension in question with the provider, but usually:

  • Under 75 years old – No tax will be due on the inherited pension.
  • Over 75 years old – The pension pot will be taxed at the beneficiary’s marginal rate of income tax.

Inheriting pension and tax

Defined contribution pension you haven’t used yet

Defined contribution pensions like People’s Pension are usually inherited tax free if your die before 75. After 75, it will be taxed at the beneficiary’s marginal rate of income tax.

You’re using an annuity

Often, annuity benefits cannot be passed on unless the member had a spouse or joint life benefit. Some annuities do come with a lump sum benefit paid on death (a bit like life assurance) but this will need to be checked with the scheme provider.

Do I have to pay inheritance tax on my pension?

Currently, unused pension savings are normally paid free of inheritance tax to beneficiaries, but this is due to change.

From 6 April 2027, unused pension savings will be included in your estate for inheritance tax purposes. More details can be found on our inheritance tax page.

Inheriting other types of pensions

Different types of pensions have varying rules when it comes to inheritance.

  • State Pension – This stops with an individual’s death and cannot be inherited.
  • Defined Benefit and Final Salary pensions – These can vary. Some will stop upon death, others can go to a spouse, partner or dependent, and some pay out a lump sum benefit paid on death. This should be confirmed with the provider.

Should I include my pension in my will?

Currently, you do not need to include your pension in your will if you have named your beneficiaries. If you have not named a beneficiary having a will can help Trustees determine who to pay.

Overall, naming your pension beneficiaries is the easiest way to ensure your wishes are clear following your death.

Nominate your beneficiary

Log in to your account to nominate a beneficiary.

Understanding pension tax

Learn all you need to know about pension tax.

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