When someone dies, you will need to inform their pension provider. You may be able to claim from their pension depending on your loved one’s age, your relationship to them and the type of pension account that they held.
Accessing a State Pension should be done within the first 12 months after your loved one’s death. Often state pensions will stop being paid after the person dies, but in some cases a spouse or civil partner can inherit some of the pension.
- Notify the Pensions Service that your loved one has died. This can be done via the Tell Us Once service that notifies all government organisations, or by calling the Pensions Service helpline on 0800 731 0469.
- Assess whether you can claim your loved one’s pension. This can only be done by a spouse or civil partner. You can contact Gov’s Pension Service to check what you can claim (you may be able to claim extra benefits if you meet the criteria): https://www.gov.uk/contact-pension-service
What you get/how you claim depends on whether you reached State Pension age before or after 6 April 2016.
If you reached State Pension age before 6 April 2016
- You’ll get any State Pension based on your husband, wife or civil partner’s National Insurance contribution when you claim your own pension.
- You will not get it if you remarry or form a new civil partnership before you reach State Pension age.
If you reached State Pension age on or after 6 April 2016
Personal or workplace pensions
Accessing a Workplace Pension should be done within the first 12 months since your loved one’s death.
- Check through their paperwork to see if they had a workplace pension scheme
- Contact the pension provider to find out how much they had and what to do next
- Find out if the pension is either a Defined Contribution pension or a Defined Benefit pension. If you are unsure what type of pension they had, you can contact their employer to ask. Read more about how to do this here [link to other article]
Defined Contribution pensions
Defined contribution pensions, also known as a ‘money purchase’ scheme, allows an individual to build up a pension pot whilst in employment. This pot is used to pay out an income once they reach retirement age, based on how much the person and/or their employer contributed, and how much this pot has grown.
If your loved one had not yet retired, any beneficiaries can usually withdraw all the money as a lump sum and set up a guaranteed income (annuity), or set up a flexible retirement income (drawdown). This might not always be possible, so check the conditions of the pension.
Different tax rules apply when inheriting a defined contribution pension, and it depends on whether the person died before age 75.
If your loved one died before age 75:
- Beneficiaries won’t pay any tax if the money is claimed and transferred within two years.
- If your loved one received income from a single life annuity, in most cases this will stop. The only exception is if there was a ‘guaranteed period’ attached to the annuity. If there was, the annuity will continue to be paid tax-free until the end of the guarantee period, which is usually five or 10 years.
- If it was a joint life annuity (i.e. with a spouse or civil partner), income will continue to be paid to the survivor tax-free until they die. However this is usually at a reduced rate of half the amount.
- Any money taken out of the pension scheme before your loved one died, or any investments bought with any cash from the pension scheme, will count as part of the deceased’s estate and thus may be subject to Inheritance Tax.
If your loved one died after age 75:
- If the person received income from a single life annuity, this will stop unless there was a ‘guaranteed period’. If this applies, the income will be paid to the beneficiaries until the end of the guaranteed period. Income tax will be deductible from these payments.
- If it was a joint annuity, it will continue to be paid to the surviving spouse or civil partner, but income tax will apply.
- If any money was taken as a lump sum, as an income from a flexi-access drawdown scheme, or from any untouched pension pot, it will be added to any other income the beneficiary receives, and taxed in the normal way.
Defined benefit pensions
A defined benefit pension pays an individual an income based on their salary, and how long they worked for their employer. These are less common, and tend to only apply to public sector or older workplace schemes. Each scheme is different, and any money paid out to any beneficiaries will be outlined in the rules of the pension scheme.
This type of pension often pays out a ‘dependant’s pension’ to anyone financially dependent on the deceased, including a spouse or civil partner, a partner the deceased wasn’t married to or in a civil partnership with, and/or child(ren) under 23. This payment is a percentage of what your loved one was getting, or would have received if they had not yet reached retirement age. This income is often taxable.
If the pension was a small amount, it can often be paid in a lump sum.
If your loved one had not retired:
- The majority of schemes will pay out a lump sum, often between two and four times of the deceased’s salary.
- If your loved one was under age 75 at their time of death, this payment is tax-free.
If your loved one had retired:
- A reduced pension will often continue to be paid to a spouse, civil partner or other dependent until they die.
- You can check this with the pension scheme or provider.
If the total value of your loved one’s pension contributions is more than the lifetime allowance, you might have to pay tax on any money you inherit from this.
The lifetime allowance changes every year, but for the tax year 2021/22 it is currently £1,073,100.
As the average UK citizen has six jobs in their lifetime, keeping track of a pension or multiple pension schemes can prove difficult. This article will help you locate any potential lost pension accounts. If you think you have all the accounts, click here for more information on accessing the pensions your loved one held.
Is the pension lost?
Before 1988, it was not a legal requirement for employers to automatically enrol employees into pension schemes. Therefore, if you cannot find pension records for a job your loved one held, they may have not been eligible, or had their contributions refunded.
- If they left their job before April 1975, it is likely that the contributions would have been refunded, or that they wouldn’t have been entitled to any pension benefits from the scheme.
- If they left their job between April 1975 – April 1988, your loved one may have been part of a pension scheme, providing that they had worked at the company for at least five years. If they left before the five years had passed, it is likely any contributions would have been refunded.
- If your loved one left their job after April 1988, they may have a pension if they worked there for more than two years. If not, any contributions may have been refunded.
Tracking down a lost pension
Most pension providers send a statement every year. Look through your loved one’s paperwork to see if they kept any of these documents. If you can’t find this, there are few ways in which you can find out whether they had a pension.
Contact the pension provider
If you know your loved one held a pension with a certain provider but you can’t find any further details, contacting the provider directly may provide you with some answers, including the value of the pension pot and whether your loved one nominated a recipient for any death benefits.
Contact them with as many details as you can provide, including:
- Your loved one’s National Insurance Number
- Their date of birth
- An account number (if known)
- The date the pension was set up (if known)
Contact your loved one’s previous employer
If you don’t know which pension provider your loved one had an account with, their former employer should have the answer to this.
Contact their former employer with the following:
- Their name and date of birth
- Their National Insurance Number
- The dates your loved one started and stopped working their (if known)
It is also good to find out whether the pension plan was a defined benefit or defined contribution plan, as this may affect your eligibility to access your loved one’s pension.
Contact the Pension Tracing Service
If you’re struggling to find the answers, the Pension Tracing Service is a free government service that searches a database of over 200,000 workplace pension schemes to find the details you need.
You can call them on 08007310193, or start an application online.
Other places to try:
- The Unclaimed Assets Register – this only covers a small number of pensions, and there is a £25 charge to start a search.
- The Policy Detective website – this is a free service but requires that you know the name of the company that provided your loved one’s pension.