What happens to my pension when I die?

It’s never a nice subject to talk about, but it is useful to know what happens to your pension in the event of your death.

If you die before you start withdrawing from your pension, it will usually be paid as a lump sum to your beneficiaries tax-free. This is as long as your pension is under the lifetime allowance limit and you’re under the age of 75 when you die.

If you have already started taking a flexible drawdown from your pension plan when you die, what your beneficiaries get depends on the age at which you die. We’ve explained the options for what can happen to your money in the table below.

Your age when you die Flexible drawdown tax Lump sum tax Buy an annuity
Under 75 tax-free tax-free tax-free
Over 75 Taxed at beneficiary's marginal rate Taxed at 45% Taxed at beneficiary's marginal rate


If you bought an annuity it very much depends upon the terms you signed up to.

If you chose an annuity that would give you an income for a guaranteed length of time, but you die within this period then the annuity will continue to be paid until the end of the guaranteed period.

If you bought a joint annuity with guaranteed payments, your payments will be made to the second person until they die. The same tax rules apply as with flexible drawdown, if you die before age 75, it’s tax-free. If you die after age 75 then the marginal tax rate applies.

If you chose an annuity which simply pays you a guaranteed income for the rest of your life, no further payments will be made after you die.

Please bear in mind
The value of your pension can fall as well as rise and you may get back less than you invest. Pension rules apply and tax rules may change in future. Please note that during any transfer, your investments will be out of the market. If you need help with pensions, seek independent financial advice.