A Workplace Pension is a way of saving for your retirement that is arranged by your employer. Alternatively, you may have put in place a Private Pension. But what happens to your Pension when you die?
What happens to your Employer’s Pension or Private Pension?
- If the person who has died has not yet retired, most schemes will pay out a lump sum; this will typically be two or four times their salary. If the person who died was under age 75, this sum is tax free. This type of pension usually also pays a taxable “survivor’s pension” to the deceased’s spouse, civil partner or dependent child.
What happens to your government pension when you die?
- Depending on when you reached or will reach your State Pension age, when you die, some of your State Pension entitlements may pass to your widow, widower or surviving civil partner. If you die, your widowed husband, wife or civil partner may also be able to claim bereavement benefits.
Will my spouse / civil partner get my pension when I die?
- Equally, if you bought a “joint life” annuity, your spouse will continue to receive the payments at the chosen level until they die. If you die before 75 the payments will be tax free. If you die before age 75, your beneficiaries can take the benefits out of the pension however they wish.
What happens to a draw-down pension when you die?
- If you die before you take anything from your pension, it will usually be paid as a lump sum to your beneficiaries tax free. If you die age 75 or older, your pension pot can be paid to your beneficiaries either as a lump sum or through flexible drawdown.
Who can inherit a pension?
- The way you take your pension will affect how you can leave it to your beneficiary (the person who inherits it) when you die. Most pension options allow anyone to inherit your pension, they do not have to be your spouse or civil partner. Make sure your pension provider has up to date details of your beneficiary.
Do pensions end at death?
- The deceased person may have been entitled to pension benefits from a private company, government agency, or union. Some pensions end at death, but many pensions provide for payments to a surviving spouse or dependent children. Survivors may be entitled to part of the payments the person would have received.
If you require assistance with either drafting of your Will, Life Planning or Administration of an Estate, please contact Fisher Jones Greenwood on 01206 700113 or email [email protected] to arrange a mutually convenient appointment.