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What happens to my pension when I die?

What happens to your pension when you die?

Written by Retirement Line Updated: 10th June 2024

If you have a pension, it’s important to understand what will happen to it when you pass away. This could be particularly important to you if you have dependents whose financial future you want to safeguard.

Understanding the implications for your family and planning ahead can provide enormous peace of mind during your transition into retirement. As different pensions are subject to specific rules and regulations, it's important to be well-informed to make the best decisions for you and your beneficiaries.

To help you understand what happens to your pension when you pass away, we’ll be talking about the following:

  • What are the different types of pensions?

  • What happens to my defined contribution pension when I die?

  • What happens to my pension annuity income when I die?

  • What happens to my drawdown scheme when I die?

  • What happens to my defined benefit pension when I die?

  • What happens to my State Pension when I die?

What are the different types of pensions?

Before delving into the details of what happens to your pension after death, it's essential to understand the type of pension you have. In addition to the State Pension, there are two main types of workplace pensions. These are defined benefit (final salary) and defined contribution (money purchase) pensions. 

To find out “what happens to my pension when I die”, first take a look through the following summaries and identify which you have. This will help you to better understand how your pension scheme provider/s may distribute funds to your dependents after your death.

Defined contribution pension

In a defined contribution pension scheme, your retirement income depends on the contributions made and the investment performance of your pension pot. Many workplace and personal pensions fall into this category, which are also known as ‘money purchase’ schemes.

Pension annuity

A pension annuity allows you to use all or some of your defined contribution fund to provide a regular guaranteed income anytime from the age of 55. Your annuity can be in place for a few years (a fixed-term annuity) or until you pass away (a lifetime annuity).


If you have a defined contribution scheme then another option you have when you turn 55 is to leave some of your money invested and take part of it as income. This is known as income drawdown

Defined benefit pension

With a defined benefit pension scheme, your retirement income is based on your salary and the number of years you have been a member of the scheme. They include ‘final salary’ and ‘career average’ workplace pension schemes

State Pension

The UK State Pension is a separate entity from workplace or personal pensions. It is paid by the government to those who have built up ten or more years’ National Insurance Contributions or Credits during their working life. 

What happens to my defined contribution pension when I die?

If you pass away before you start to access your defined contribution pension fund, all your money can usually be left to your beneficiaries. If you have a defined contribution scheme, make sure you tell your scheme provider who you want to leave your money to and provide them with your beneficiaries’ contact details. 

Your beneficiaries could take the money as a cash lump sum, purchase an annuity, or  invest it in a drawdown scheme, depending on their circumstances. 

If you are under 75 when you die, your money will be paid to them tax-free, providing they take the money within two years. If you die after turning 75, your beneficiaries will typically be liable for tax at their marginal rate on any pensions you leave behind.

What happens to my pension annuity income when I die?

Whether your beneficiaries will receive anything from your pension annuity when you die depends on how the annuity is set up. You have the option of adding death benefits to your annuity plan so that a beneficiary receives money from your annuity after you die. 

There are three main ways to do this:

  • You have a joint plan. With a joint lifetime annuity, payments continue until your beneficiary passes away. With a joint fixed term annuity, payments continue until the end of the annuity term.

  • You have value protection in place. In this case, a lump sum will be paid to your chosen beneficiaries, minus any payments that have already been made.

  • You die within your guarantee periodPayments will continue to be made until the end of the guarantee period to your estate or person/s you name on the policy.

Please note that by default income from an annuity will typically end when you pass away and any remaining funds stay with your annuity provider. It is therefore important to choose a suitable form of death benefit should you wish to leave money to a beneficiary.

Also, you should know that choosing annuity death benefits may reduce the level of retirement income you receive while you’re alive. The more money you decide your beneficiary will receive after you die, the more your income in your lifetime will reduce. Please see our guide to annuity death benefits for more information.

What happens to my drawdown scheme when I die?

If you pass away while taking an income from an income drawdown scheme, your dependants will typically have these options: 

  1. Take a cash lump sum. They could withdraw all your pension savings from your drawdown scheme as a cash lump sum to spend how they wish.

  2. Continue the drawdown scheme. They may be able to leave the money where it is and take an income from it for themselves. This option depends on your drawdown scheme’s rules. If they wish to do this but your scheme refuses then they may be able to move to another drawdown provider.

  1. Purchase an annuity. If they are 55 or over they can purchase an annuity to provide a guaranteed regular income from your fund. 

If you are 75 or older when you pass away, for all these options your dependents will be liable to income tax on the money they receive.

What happens to my defined benefit pension when I die?

Depending on your scheme rules, your defined benefit pension may pay out a lump sum to your spouse, civil partner or dependent if you pass away and are still an active member of the scheme (i.e. you haven’t started to take your pension). 

Your beneficiaries may also receive a lump sum if you pass away after you start taking your pension. For example, a pension protection lump sum might be paid if you pass away within a set number of years (typically 5–10 years) of receiving your pension.

In some cases, upon your death a defined benefit pension may continue to pay an income rather than a lump sum to your beneficiaries. Typically this means they would receive a percentage of your pension income.

As each scheme provider has different rules, if you have a defined benefit pension then be sure to check with your own provider what your beneficiaries can get when you die. You should also ensure the contact details for your provider are in a safe place for your family to locate one day.

What happens to my State Pension when I die?

Usually when a person passes away, their State Pension payments will stop. However, it is possible for someone to inherit another person’s State Pension income.

One example is if you are married or in a civil partnership and you both reached State Pension age before 6 April 2016. In this case when one of you dies, the partner may be entitled to receive a higher basic State Pension.

There are other scenarios where someone may be able to inherit some of their spouse or civil partner’s State Pension. Please see State Pension death benefits at or contact the Pension Service for more information.

Seek professional advice or guidance

If you want concrete answers to “what happens to my pension when I die?” then your next step should be checking with your scheme provider to see what their specific rules are. By being aware of the rules related to your pension, you can make informed decisions now that provide financial security for your loved ones. 

If you are planning to retire in the next few months then now is the ideal time to seek professional advice or guidance to ensure you understand all your options. Planning ahead not only brings you peace of mind but also contributes to a more secure financial future for both you and your beneficiaries.

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