If you die before taking your pension benefits

Who will get my benefits?

If you die before taking any of your benefits, your pension scheme may give a lump sum to a person or people you have chosen (your beneficiaries). The pension scheme is not normally bound by who you choose, but they should take your wishes into account.

If you die before you’re 75 and the lump sum is paid within two years of your death, it can generally be paid without any tax charge. If you die aged 75 or over, your beneficiaries may have to pay tax on what they get (see table below).

Defined contribution scheme

In a defined contribution scheme, the value of the lump sum is usually based on the value of the savings you have built up. You can choose anyone to get this lump sum – they don’t have to be your dependants. They may instead choose to take an income, or to take a combination of both.

Defined benefit scheme

In a defined benefit scheme, the value of the lump sum is usually calculated as a multiple of your final earnings. You can choose anyone to get this lump sum.

The scheme may also pay a pension income to your spouse, civil partner or other dependants.

How much tax will your beneficiaries pay?

The table below shows how much tax your beneficiaries will pay on your pension benefits after you die.

Type of pension scheme

If you die before the age of 75

If you die aged 75 or over

Most defined contribution schemes   

Lump sums are tax-free. Income from flexi-access drawdown funds or annuities is tax‑free.

Lump sums are taxed as income. Income taken from flexi-access drawdown funds or annuities is taxed as income.

Defined benefit schemes

Lump sum is tax-free.
Dependant’s pension is taxed as income.

Usually no lump sum can be taken. Dependant’s pension is taxed as income.


If your beneficiaries currently pay tax at the basic rate of 20%, a large lump sum from your pension may push them into the higher tax band of 40% (or even 45%). It’s important to get financial advice.

Back to Pensions

Understanding pensions

There are many different pension schemes available, including the State Pension paid by the government.

Pension changes

Since April 2015, some types of pension have become more flexible.

State pensions

The State Pension is a regular payment you can get from the government when you reach retirement age.

Workplace pensions

A workplace pension is a pension scheme arranged through your employer. There are different types of workplace pensions.

Personal pensions

Personal pensions are often available through your workplace. But self-employed people often have them too.

Defined benefit schemes

A defined benefit scheme is when your employer promises to give you a pension when you retire.