What happens to a workplace pension when you die depends on its type: a defined contribution pot usually passes to beneficiaries, a defined benefit scheme to dependants.

A workplace pension does not simply vanish when you die, but what your family receives depends on the type of scheme, your age and the paperwork on file. Employers also sometimes add a separate lump sum for those who die while working. Whether a pot, a dependant's pension or an employer lump sum applies to you is easier to settle with an FCA-authorised adviser, calling you free of charge after you use this page's short form.

Two things your family may receive: the pension and death in service cover

Two different things get called workplace pension death benefits: the money in the pension itself, and any extra cover your employer arranges alongside it. The first depends on whether your scheme is defined contribution (a pot of savings) or defined benefit (a promised income, often called final salary or career average). The second is "death in service", covered in its own section below.

If you are not sure which type you have, your latest statement or the scheme administrator will say. MoneyHelper also suggests asking the provider.

In short: with a defined contribution scheme, the remaining pot can usually go to the people you chose. With a defined benefit scheme there is no pot, so the scheme's rules decide what is paid to a spouse, partner or children. For how the rules work across every kind of pension, see pension death benefits.

Is death in service the same as a workplace pension?

No. Death in service is a benefit from your employer, not the money you and your employer have paid into your pension. Royal London's guide describes it as a common benefit that "pays a tax-free lump sum to a person of your choice if you die while still employed by the company". It is usually worked out as a multiple of your annual salary, and the exact multiple varies by employer.

Three points catch families out:

  • Employers do not have to offer it. Royal London calls it "an additional extra rather than a legal requirement", and some employers only provide it to members of their workplace pension scheme.
  • It stops being relevant when you leave the job. You may lose the cover or move to a less generous cover with a new employer.
  • It sits beside your pension rather than inside the pot, so the pension savings and the death in service sum are paid out separately.

Where the employer pays the lump sum into a trust, the trustees can have the final say on who receives it even if you filled in a nomination. If the lump sum is paid from a registered pension scheme, HMRC's Pensions Tax Manual (PTM173000) counts it toward the lump sum and death benefit allowance explained in the tax section below, as it does any lump sum death benefit other than a charity or trivial commutation one. Your HR team can confirm how your own cover is arranged, and an adviser can help you make sense of that wording if you use the form here.

What happens to a defined contribution workplace pension when you die?

MoneyHelper says that when you die, a defined contribution pension pot "can usually be passed to your beneficiaries", and that if you have already taken some money, beneficiaries will usually get whatever is left. So if you die before drawing anything, the whole pot is normally available; if you were in drawdown, the remainder is.

What the beneficiary can then do depends on the scheme's own rules on death benefits. The usual choices are:

Not every provider offers every option. If the scheme does not allow the route a beneficiary wants, MoneyHelper notes they could consider moving the money to another provider. Money left invested after a death can fall as well as rise in value, so what a beneficiary eventually takes may be lower than the pot at the date of death.

If you had already bought a lifetime annuity with the pot, the income generally stops at death unless you chose a joint-life basis, a guarantee period or value protection when you bought it; annuity death benefits explains each.

What happens to a defined benefit workplace pension when you die?

A defined benefit scheme does not hold a pot in your name, so the scheme's rules say what is paid. According to MoneyHelper, typical examples include a dependant's pension of a percentage of your promised pension, a lump sum if you die in service and, if you die before taking the pension, a refund of your contributions with interest. Under the rules GOV.UK summarises, only a dependant can usually receive a defined benefit pension; the examples it lists are a husband, wife or civil partner, and children under 23. Anyone else can be paid only if the scheme's rules allow it, and the charge can then be as high as 55%, because it counts as an unauthorised payment.

Whether an unmarried partner counts as a dependant, how long a child's pension lasts and what share a spouse receives are scheme-specific. A few examples where this site covers a single scheme: the Local Government Pension Scheme, Teachers' Pension Scheme, civil service pension and USS. For the general picture on final salary schemes, see final salary pension death benefits.

Nomination forms and trustee discretion: who actually gets the money?

Most workplace schemes ask you to say who you would like to benefit, usually on an expression of wish or nomination form. GOV.UK says the person who died "will usually have nominated" the recipient, but a provider can sometimes pay another person instead, such as when the one named cannot be traced or has died.

The form guides rather than binds. MoneyHelper explains that most providers or trustees have the right to choose who receives the money, called discretion, and that they will usually choose those listed on your form but "do not have to". A smaller number of schemes use direction, where the death benefit must go to the people you nominate. The scheme rules say which applies.

Practical points:

  • Keep the form up to date after a marriage, divorce, new child or the death of someone you named.
  • Check what happens if you have no form. MoneyHelper gives the example of a Nest workplace pension, where the pot value would normally form part of your estate.

Help with completing the paperwork is in filling in an expression of wish form; the wider question of who you can name is in pension beneficiaries, and what happens with no nomination is in pension with no beneficiary. How far trustees may depart from a nomination varies by scheme; the adviser who phones after an enquiry form request here can explain it at no cost.

Income Tax on what your family receives: the age-75 line

GOV.UK sets out the general UK rule, with the person's age at death the key factor. For most lump sums, whether defined contribution or defined benefit:

  • death before 75: no tax, unless the lump sum goes above the allowance the person who died had for such payments (the lump sum and death benefit allowance);
  • death at 75 or over: Income Tax deducted by the provider.

GOV.UK gives that allowance as £1,073,100; people with protections may have a higher figure. A death before 75 can still lead to tax if the provider has known of the death for over two years before the lump sum is paid, in which case Income Tax is due on the whole lump sum. Where the scheme itself pays a pension, as with a dependant's pension, it is treated as taxable income at any age at death.

Tax rules for annuities and drawdown, and the way tax is collected on inherited pensions, are in inherited pension tax. This is the general UK position, not anyone's own tax bill; Scottish taxpayers have different income tax rates. Age at death, the way the benefit is paid and the size of the pot all change the result.

Inheritance Tax from April 2027: why death in service is left out

At present most unused workplace pension money passes outside the estate for Inheritance Tax because the provider has discretion. GOV.UK says the current position is that you "do not usually pay Inheritance Tax on a lump sum because payment is usually ‘discretionary’".

That changes for anyone who dies on or after 6 April 2027. In HMRC's policy paper on GOV.UK, the measure "will bring most unused pension funds and pension death benefits within the value of a person's estate for Inheritance Tax purposes from 6 April 2027", and the personal representatives dealing with the estate take on the job of reporting and paying any tax due. This is law, not a proposal. HMRC's technical note records that the Finance Act 2026 received Royal Assent on 18 March 2026, and section 71 ties the changes to deaths on or after 6 April 2027.

For workplace schemes, the same paper sets out two important carve-outs:

  • "Death in service benefits payable from a registered pension scheme and dependant's scheme pensions from a defined benefit arrangement, or from a collective money purchase arrangement, are excluded from these changes and will not be in scope of Inheritance Tax."
  • A surviving spouse, a civil partner or a registered charity receiving death benefits keeps the exemption that applies today.

Unused defined contribution money is the plainest example of what is brought in, as opposed to a dependant's pension or an in-scheme death in service sum. Inheritance Tax is only charged where the estate is large enough, and this page does not work out anyone's liability. Pensions and inheritance tax goes through the detail, and protecting a pension pot from inheritance tax covers planning steps.

Workplace pension death questions

Do workplace pensions pay out on death?

Usually, yes, in some form. A defined contribution pot can generally go to beneficiaries, and a defined benefit scheme may pay a dependant's pension or lump sum. The detail comes from your scheme's rules.

Does a works pension die with you?

Your own income from it stops, but a pot or scheme may still pay others. Income from a lifetime annuity is the usual exception: it generally stops at death unless you chose a joint-life basis, guarantee period or value protection.

Can a workplace pension go to an unmarried partner?

With a defined contribution pot you can name anyone you like on the nomination form, though the trustees usually make the final decision. A defined benefit pension can usually only go to a dependant, so whether an unmarried partner qualifies depends on the scheme's rules.

Is death in service linked to my pension?

Sometimes. Royal London says some employers offer death in service only to members of their workplace pension scheme, and MoneyHelper links a defined benefit scheme's death-in-service lump sum to still working for the employer. It is otherwise a separate employer benefit.

Does my employer have to offer death in service?

Employers do not have to provide the cover in the first place. Whether it applies to you, and who decides where it goes, depends on your contract and the scheme terms, so ask your employer's HR team for the policy in writing.

Does tax come off what my family receives?

Often not on a lump sum if you die before 75 and it is paid within two years, up to the allowance. After 75 it is taxed as income of the recipient. From April 2027 the Inheritance Tax rules also change, as above.

Checking your own scheme

The details that matter most are the type of pension, who is on file, whether the trustees can overrule your wishes and whether your employer provides death in service. Gather the scheme booklet, your nomination form and your latest statement. With those papers beside you, a short message through this page's form is enough: an FCA-authorised adviser then rings and takes each of the four points in turn, without charge.

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