What Happens to Your Pension When You Die?
For most people, a pension is their single largest asset after their home. Yet it usually sits entirely outside their will. Here's how pension death benefits actually work — and why your expression of wishes matters far more than most people realise.
One of the most common misconceptions in estate planning is that a pension is covered by your will. In almost every case, it isn't. Pension death benefits are governed by the rules of the pension scheme and administered by its trustees — not by your executor, and not by your will.
Why Pensions Don't Pass Through Your Will
Most defined contribution pensions (workplace pensions, personal pensions, SIPPs) are written in discretionary trust. This means the pension fund is held outside your estate by the pension trustees, who retain discretion to decide who receives the death benefits. The advantage is significant: funds held in trust are generally exempt from inheritance tax and pass to beneficiaries without going through probate.
Defined benefit (final salary) pensions typically provide a lump sum and/or a dependent's pension to a surviving spouse or nominated dependant, again according to the scheme rules rather than your will.
The Expression of Wishes Form
Because pension trustees have discretion, the most important document you can complete is an expression of wishes (also called a nomination of beneficiaries form). This tells the trustees who you would like to receive your pension death benefits. While not legally binding, it carries very significant weight — trustees will usually follow it unless there are compelling reasons not to.
Critically, many people complete this form once — often when they first join a pension scheme — and never update it. If your circumstances have changed (new partner, divorce, new children), an outdated expression of wishes can result in benefits going to someone you would no longer choose. Contact your pension provider to review or update your nomination. The MoneyHelper guide to pension beneficiaries explains the process clearly.
"Pension funds that pass outside the estate are generally free from inheritance tax — but only if the expression of wishes is up to date and the trustees exercise their discretion accordingly."
— GOV.UK, Tax on a Private Pension You InheritDeath in Service Benefits
Many workplace schemes include a death-in-service benefit — a lump sum, often two to four times your salary, paid if you die while employed. Like the pension itself, this typically passes outside your estate via a trust arrangement. Your employer will have a nomination form for this separately from your pension. It's worth checking — and updating — both.
What Your Will Should Still Cover
Even though pensions pass outside your will, a comprehensive estate plan requires both. Your will covers:
- Property, savings, and investments held in your sole name
- Personal possessions and specific gifts
- Guardianship for children
- Appointment of an executor to deal with the rest of your estate
- Funeral wishes and any specific requests
Your pension nomination and your will work together. Neither replaces the other. Without a valid will, the non-pension part of your estate is distributed under the rules of intestacy — regardless of how carefully you've completed your pension expression of wishes.
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Your pension nomination handles the pension. Your will handles everything else. Get both right.
Choose Your Will →This article is for general information only and does not constitute legal advice. For advice specific to your circumstances, consult a qualified solicitor.