What to do about someone’s pension when they’ve died

If the person who died was getting a State Pension, you need to tell the Pension Service they’ve died so that payments stop.

You might be entitled to extra pension payments from your spouse’s or civil partner’s State Pension.

It depends on the amount of National Insurance contributions they made and when you and your spouse or civil partner reach(ed) the State Pension age.

The Department for Work and Pensions (DWP) has identified some people whose pensions were underpaid because they didn’t get the automatic increase they were entitled to. These include people who were:

• married or widowed when they died, or

• aged 80 or over when they died.

The DWP may have already written to the person or their next of kin, if they know the correct address.

If you think the person who died may have been underpaid for their pension, you can request additional information using the ‘Request information’ button on GOV.UKOpens in a new window

It may take some time for the DWP to deal with your enquiry, but they will write to you to tell you the outcome either way. If the person was owed money from their pension, the DWP will let you know what the next steps are.

You can check what you might be entitled through your partner's pensionOpens in a new window at GOV.UK.

If you haven’t reached State Pension age, you might also qualify for Bereavement benefitsOpens in a new window

Different tax rules apply to the rules when inheriting a defined contribution pension.

It depends on whether the individual died before or after the age of 75.

If the person died before age 75:

• If they received income from a single life annuity, this will stop unless there was a ‘guaranteed period’ attached to the annuity. In which case, it will continue to be paid tax-free until the end of the guarantee period – usually five or ten years.
• If it was a joint life annuity, income will continue to be paid to the survivor – also tax-free – until their death. But this is usually at a reduced rate – half is common. If you’re not sure which they had, ask the annuity provider.
• If the deceased had a flexi access drawdown pension which was set up or first accessed after 5 April 2015, any money paid within two years of the pension holder’s death will be paid tax-free.
• However, if the pension is claimed more than two years after the pension holder’s death, tax might be payable.
• Any money taken out of the pension scheme before death, or any investments bought with cash from the pension scheme, will count as part of the deceased’s estate and might be subject to Inheritance Tax.
• The money in the pension will continue to grow tax-free as long as it stays invested.

If the person died age 75 or over:

• If they received income from a single life annuity, this will stop unless there was a ‘guaranteed period’. In which case, it will be paid to the beneficiaries until the end of the guaranteed period. Income Tax will apply to the payments.
• If it was a joint annuity, income will continue to be paid to the survivor, and Income Tax will apply.
• Any money taken as a lump sum or as an income from a flexi-access drawdown scheme or from any untouched pension pot, will be added to the beneficiary’s’ other income and taxed in the normal way.

How a defined benefit pension pays out depends on whether the deceased was retired.

If the deceased hadn’t yet retired:

• Most schemes will pay out a lump sum that is typically two or four times their salary.
• If the person who died was under age 75, this lump 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.

If the deceased was retired:

• If the deceased received a pension from a defined benefit scheme, a reduced pension will often continue to be paid to a spouse, civil partner or other dependent according to the rules of the scheme.
• Check what benefits are due with the pension scheme or provider.

If you need more information about sorting out the pension of someone who’s died, or how you should claim their pension, contact us: