What happens to your pension savings when you die depends on whether you’ve started taking money from them yet – and if so, how you’ve chosen to access them. These factors are often called the ‘death benefits’ of your options at retirement.
Nominate a beneficiary
Even before you start claiming your pension pot – or if you’re keeping your pension pot where it is – you should nominate a beneficiary.
This means choosing a person (or people, or organisation) who you would like your pension pot to go to if you die before taking your money – and letting us know who that person is, so that our Trustee can consider your wishes after you’re gone.
If you nominate more than one beneficiary, you should tell us how you’d like your pension savings shared out. For instance, if you want two people to get half of it each, or if you’d like one person to get a quarter and another person to get the other three quarters.
It’s important to make sure we’ve got the right details for your beneficiaries. Check them now in your Online Account.
Or, if you’d rather not do it online, you can ring us on 0300 2000 555 to check your beneficiary details and we’ll help you update them if you want.
If you want to update your beneficiary details by post, you can download and print our paper beneficiary nomination form.
Do beneficiaries pay tax on the pension money they receive?
Whether or not your beneficiary pays tax on the pension savings you leave to them depends on a number of factors, including your age at death:
- The payments are normally tax-free if you die before you’re 75.
- Your beneficiary would pay tax at their highest rate if you die after you’re 75.
If you leave money to your loved ones outside of a pension pot or pension product, they may have to pay inheritance tax on it.
What happens when you die if you’ve taken some pension money?
Can I leave my money to someone when I die if I…
|…keep my pension pot where it is?||Yes||If you’re keeping your pension pot where it is for now, make sure you’ve nominated a beneficiary so we know who you’d want your money to go to if anything happened to you.|
|…take a pension pot all in one go?||Maybe||Once you’ve taken all your money out of your pension pot, you can make arrangements to leave it to someone when you die, by writing a will for example. But if you leave your loved ones money outside of a pension, they may have to pay inheritance tax. And if you spend all of your money after taking it out of your pension, there won’t be anything left to leave to anyone.|
|…take my pension pot a bit at a time?||Yes||If you’re taking your pension pot a bit at a time (no matter whether you’re taking your tax-free cash up front or spreading it across all withdrawals) – you can nominate a beneficiary. So if there’s still money left in your pot when you die, it could be passed to the person (or people) you’ve nominated. If you’ve already chosen a beneficiary while saving into your pension pot with The People’s Pension – the same beneficiary details will be used once you start taking money out. Or you can update your beneficiary details at any time. With The People’s Pension, any money we pass on to your beneficiary would be paid to them as a single lump sum – we can’t pay it to them as an income, or carry on investing it on their behalf.|
|…buy a guaranteed income (‘annuity’)?||Maybe||What happens when you die depends on what type of guaranteed income you choose. For example, you could chose a single-life income which will end when you die, or a joint-life one that will continue to pay your partner or spouse after you’re gone.|