Will My Pension Stop When I Die?

What will happen to my pension when I die? Will it just stop or can I pass it on to my family?

Question asked by Sarah Jones
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Answered by Neil Adams

How your pension will be treated on your death will depend largely on how you’ve opted to take your pension.

What happens to an annuity if I die?

If you have used your pension fund to buy an annuity, or income for life, this income may continue after your death provided you have elected for it to do so at the outset.

This means that when you bought your annuity, you must have opted for one which provides a guarantee that if you die early income will continue to be paid for a set period or is payable as a lump sum.

Your annuity income can also continue after you die if you’ve chosen a ‘joint life’ annuity. This means an income will be paid to a dependant – usually your partner or spouse – if they outlive you.

If you haven’t chosen one of these options, your annuity income will usually stop when you die.

What happens to pension drawdown when I die?

If you are drawing your retirement income from your pension fund, known as pension drawdown, any remaining funds will be payable to your nominated beneficiaries.

This will usually be free from inheritance tax providing the cash remains invested in the pension or in drawdown at the date of your death, and if you die before the age of 75 your beneficiaries won’t have to pay any income tax on the money, either.

It is important that you review these arrangements in light of the new pension rules. A professional pension adviser will be able to provide advice regarding these arrangements. If you would like any help in this area please contact us to speak with one of our financial advisers.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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