What happens to my pension if I die before retirement?
Planning what happens to your pension savings after your death is an important part of looking after the people who matter to you. While it can feel like a difficult topic to think about, taking a few minutes to understand your options now can make things clearer for your loved ones in the future.
This guide explains what happens to your Smart Pension savings if you die before retirement, what an expression of wish is, and how it helps us understand who you'd like to receive your pension benefits.
If you die before you retire, the money in your pension pot can usually be paid as a lump sum to your chosen beneficiaries. In most cases, beneficiaries won't pay personal or inheritance tax on the money they receive.
Unlike assets such as property, your pension is not currently considered part of your estate and is therefore not usually covered by your will. Instead, the pension trustees decide how your pension savings should be distributed. When making their decision, they may take into account:
your expression of wish
the contents of your will
whether anyone was financially dependent on you during your lifetime or at the time of your death
each beneficiary's age, needs and relationship to you
What is an expression of wish?
An expression of wish tells us who you’d like your beneficiary to be, and helps guide the pension trustees decision in choosing them. It's important to keep your expression of wish up to date, just like your will, to reflect any changes in your circumstances over time.
How do I complete my expression of wish?
You can add and change your beneficiaries via the ‘Beneficiaries’ page within your Smart Pension account, where you will be asked to add your chosen beneficiaries’ details.
Make sure you set the payment percentage as "100". As you add more beneficiaries, you can adjust this percentage. The total should always add up to 100 across all beneficiaries.
Learn more about how to complete your expression of wish here.
What happens if I don’t complete my expression of wish?
Without an expression of wish, it can be difficult for us to establish where your savings will go. You don’t have to provide one, but we strongly encourage you to as it ensures your wishes are taken into consideration.
Will my expression of wish always be honoured?
We always do our best to accommodate your wishes, but we have a legal duty to ensure that the most appropriate people receive the funds.
For example, if your expression of wish leaves your pension fund to a friend, but you have a financial dependent, this would need to be taken into consideration. The trustees have discretion as to who should receive the payment.
Can I add more than one beneficiary
Yes, you can add as many beneficiaries as you like and you can specify what percentage of your pension savings you’d like to go to each one. Read more to find out how to add or change your beneficiaries.
Want to know more about your expression of wish?
Here at Smart Pension, we want as many people as possible to retire their way. That's why it’s important for you to understand what happens to your pension savings if you die before retirement.
Download the Smart Pension app and sign in today so that you can update your beneficiary details.
Why this matters for your retirement planning
Planning your beneficiaries is an important part of your retirement planning. Your Smart Pension account and retirement tools let you manage your savings, explore options like Smart Retire, and make sure your pension continues to work for you and your loved ones.
How can I make sure my retirement plans are on track?
Reviewing your retirement plan regularly will help you feel confident that your pension is working for you and your loved ones.
You should take the time to:
Check how much you’re contributing to your pension and see whether you’re on track to reach your retirement goals
Consider how your pension savings might grow over time
Make use of tools like our pension calculator or the Smart Pension app to see what retirement is likely to look like
Changes to inheritance tax and pensions in 2027
From 6 April 2027, the UK government plans to change how pensions are treated for inheritance tax purposes.
Currently, most workplace pensions are held outside of your estate. This means they are not usually included when inheritance tax is calculated. However, under the new rules, most unused pension savings and death benefits may be included as part of your estate when assessing inheritance tax.
This represents a change in how pensions are treated, particularly where savings are passed on rather than used during retirement.
There are still important exceptions. For example:
benefits paid to a spouse or civil partner are expected to remain exempt
death-in-service benefits from workplace pensions are not expected to be included in inheritance tax calculations
In most cases, any inheritance tax due would be handled by the personal representatives of your estate, rather than the pension scheme itself. Although we are expecting further guidance on this, as it may be possible for pension schemes to pay tax directly on the request to the personal representative.
These changes are due to come into effect from April 2027 and may continue to evolve. For many people, pensions are still expected to remain a tax-efficient way to save for retirement, but it’s worth keeping up to date as the rules develop.