Passing on Pension Wealth

What happens to my pension when I pass away?

Death benefits

Money that is payable from your pension after you pass away

There are a number of potential options available to your beneficiaries when you pass away, subject to legislative criteria that we will explore in more detail below.

Death benefits is the term given to any money which is payable from your pension after you pass away. With defined contribution pensions such as SIPPs, paying death benefits will involve distributing any money which is left in your pension when you pass away.

You’ll see that we use the word ‘beneficiary’ throughout this page, and also in our literature. A beneficiary is defined as any person (or charity, trust, organisation etc.) who may be able to receive death benefits from your pension.


Getting advice in respect of your death benefits

We would recommend that you discuss your inheritance planning and expression of wishes with a financial adviser. If you do not have a financial adviser, we strongly recommend that you speak to one. You can find a financial adviser by contacting MoneyHelper on 0300 500 5000.

To help you make a decision, you can also book a Pension Wise appointment. Pension Wise is a government service from MoneyHelper that offers free, impartial pension guidance, so that you can make an informed decision. All guidance sessions are conducted over the phone by an independent pensions specialist.

You can book a Pension Wise appointment online here, or by calling 0800 138 3944. Please send a copy of your booking confirmation email to us using the below contact email address, so that we can make a note of your appointment date.

If you would like us to arrange a Pension Wise appointment on your behalf, please get in touch with our Claims and Bereavements team using the details below. Please be aware that we are unable to arrange Pension Wise appointments for anyone under the age of 50, however you can arrange these appointments directly with Pension Wise.

To allow us to book your appointment, we will need to collect some additional information from you. Once your appointment is booked, you will receive a booking confirmation from us and from MoneyHelper directly.

Contact Us

Contact us

If you would like to speak to us, including notifying us if a client has passed away, please call us on 0370 414 7000.


Under current pension rules, you are principally able to leave your pension to:

  • Any person(s) you nominate
  • A registered charity
  • A trust

You are able to nominate to leave your pension to a combination of the above, in whatever proportion you would like.

There is presently no limit on the number of  beneficiaries that you can nominate to receive some or all of your pension when you pass away.

Beneficiary A beneficiary is any person (or charity, trust, organisation etc.) who may be able to receive death benefits from your pension.
Dependant A dependent is a beneficiary who was dependent on the deceased client due to financial dependence, physical or mental impairment or a mutually dependent relationship. This includes children under the age of 23, and spouses or civil partners.
Nominee A nominee is a beneficiary of a deceased pension scheme member who is not a dependant, but has been chosen to be a nominee by the deceased (i.e. named on their expression of wishes). Beneficiaries can also be chosen to be nominees by pension scheme administrators.
Successor A successor is a beneficiary of someone who died holding a pension made up of death benefits, who has been chosen to be a successor by the deceased on their expression of wishes. Beneficiaries can also be chosen to be successors by pension scheme administrators.
Lump sums Beneficiary annuity Beneficiary drawdown
• Available to any beneficiary and in any situation
• Involves a one off payment to the beneficiary for their share of the death benefits
• If the beneficiary is a person, this means that the funds would count towards their estates for inheritance tax purposes if they were to pass away, unless they made other arrangements for the funds.
• An annuity is a regular income which is normally paid for life.
• Annuities are not available to beneficiaries which are trusts, charities or other organisations
• Annuities may not be available if the beneficiary was not a dependant or wasn’t named on the deceased’s expression of wishes
Please be aware that not all Curtis Banks products offer beneficiary annuity. Please contact us to discuss if you have any further queries.
• Beneficiaries’ drawdown allows a beneficiary to keep their share of the death benefits within a pension
• They can invest the funds as they choose and take income payments as and when required, much as they would be able to do with their own pension benefits except there is no minimum age for withdrawing the income.Beneficiaries’ drawdown is only available to individuals: it can’t be set up for trusts, charities or other organisations.
• It may not be available if the beneficiary was not a dependent or wasn’t named on the deceased’s expression of wishes.

Expression of wishes

Tell us who you would like your beneficiaries to be

The scheme administrator has the final say over who receives the death benefits of your pension. This is part of the structure which allows your pension to stay outside of your estate for inheritance tax purposes and normally can’t be changed.

However, the scheme administrator still wants to distribute the death benefits in the way you would have wanted. An expression of wishes is your way of telling your scheme administrator who you would like your beneficiaries to be.

It is critical that you keep your expression of wishes up to date and review this regularly to ensure that your intentions are clear to Curtis Banks as to how you would like your pension distributed when you pass away.

Learn More


What is the difference between an Expression of Wishes and a Will?

Pensions sit outside of inheritance tax, and also your Will.

This carries an obvious benefit, in that your pension should be outside of your estate for inheritance tax purposes.

You can see more about tax treatment of death benefits below. However, it is important to ensure that you have an expression of wishes in place alongside your will, to ensure that your pension is distributed as you intend.

How are death benefits taxed?

If you pass away before age 75

If you pass away before age 75, your beneficiaries won’t normally pay income tax on the money they receive. However, if it takes more than two years for the death benefits to be distributed to your beneficiaries, they will normally need to pay tax as outlined under ‘How are death benefits taxed if I die age 75 or over?’.

The Lump Sum and Death Benefit Allowance (LSDBA) limits the amount which can be taken as a tax-free lump sum during your lifetime or following your passing before age 75. The current LSDBA is set at £1,073,100.

If you pass away before age 75, any lump sums paid within the relevant two-year period which are within the member’s remaining LSDBA are tax-free. Any lump sum in excess of this level is taxed. If benefits are paid after the relevant two-year period the whole amount is taxed. If these amounts are paid to a qualifying person (broadly an individual) they are liable to income tax. If the lump sum is paid to a non-qualifying person (for example, a trust) it’s liable to 45% tax.

How are death benefits taxed?

If you pass away after age 75

If your beneficiaries are individuals, they will pay tax at their marginal rate of income tax. Lump sums will be taxed in one go when the beneficiary receives the payment. Where a beneficiary opts to take income, they will only pay tax on each income payment as it  is made. This means a beneficiary could end up  paying less tax by opting for an annuity or  drawdown and spreading the payments over a period of time.

If a taxable lump sum is paid other than to an individual (for example, to a trust), there will normally be a flat charge of 45%. However, if you had named a charity on your expression of wishes and had no dependants, the payment to the charity will be tax free.

If a taxable lump sum is paid to a trust, individuals  who receive payments from the trust are able to  reclaim the 45% charge and pay income tax on the  whole amount. This means they should end up in a  similar position as if they had received a taxable  payment directly from a pension