Yes, you can generally leave your pension to almost anyone (family, friends, even charity) by naming them as a beneficiary on an "Expression of Wish" form, but rules vary by pension type, and a spouse's consent is often required, especially in community property states like California, where they have automatic rights to survivor benefits. Your pension plan's specifics, payout options (lump sum vs. income), and tax implications dictate who can inherit and how.
Much like naming a beneficiary on a life insurance policy, you can name one or more individuals to receive the benefits of your pension.
When you die, your pension pot can usually be passed to your beneficiaries – one or more people or organisations you can choose to receive the money. If you've already taken some money from your pension, your beneficiaries will usually get whatever is left.
When you die, your spouse, civil partner, or beneficiaries may be able to inherit your pension. The pension trustees will decide who the pension passes to, but they will take your expression of wish form into account when making their decision.
Yes, you can usually transfer your pension to another provider if you want to bring your savings together. But in some cases, a transfer might not be possible or advisable – like if there are restrictions on your current scheme, or if you'd lose guaranteed benefits.
If the scheme you're transferring to does not offer the same features as your existing pension, you'll lose these benefits by moving your pension. special features or guarantees, including: guaranteed annuity rates – these might let you convert your pension into a higher guaranteed income than you could get elsewhere.
A pension transfer is when you move your pension from one provider to another. As your pension savings are invested, you'll need to sell the investments in your pension fund and turn your pot into cash. This money is then transferred to your new pension provider before being invested into your new plan.
If you have a defined contribution pension, any money left either in your pot or in drawdown will pass to your beneficiaries. They can take it either as a lump sum or as a series of payments, or use it to buy an annuity.
Whether children can inherit a parent's pension depends on the type of plan. Traditional defined-benefit pensions usually pay income for life to the retiree and sometimes a surviving spouse, but rarely to children unless a special option was chosen.
Defined Benefit Pensions
Federal law gives spouses automatic survivor rights unless they waive them. Some plans offer limited benefits for dependent children (usually minors or full-time students), but adult children seldom qualify unless your dad selected a special payout option naming you before retirement.
Whether your children can inherit your pension depends on the type of pension you have. If you have a defined contribution pension, like ours at People's Pension, you could choose your children as beneficiaries so they can inherit your pot.
An 'expression of wish and nomination' form, as it's officially called, tells your pension provider who should receive your pension savings (the 'beneficiaries') if you die before you retire.
Transferring or drawing your pension
Some providers ask for an exit fee when you withdraw or transfer money out of your pension. After some savers had to pay exit fees of up to 10%, the Financial Conduct Authority (FCA) capped exit fees at 1% for savers over 55, and banned exit fees in any new plans.
You can nominate a loved one, including family members, spouses or friends as a beneficiary of your pension to be considered for any death benefits after you've gone. In a divorce or at the end of a civil partnership, pensions may be considered a shared asset.
If you do not have a spouse, or your spouse gives up their beneficiary rights to your pension benefit, you can name other people as your beneficiary(ies). These can include your children, other family members, friends or others. You can also name organizations, trusts or your estate as beneficiaries.
Pension benefits are typically a fixed monthly payment in retirement that is guaranteed for life. Some pension benefits grow with inflation. Other pension benefits can be passed on to a spouse or dependent. But pensions aren't the only financial route to guaranteed lifetime income after you retire.
Many families find a middle ground by using a “lifetime trust” or “beneficiary-controlled trust.” These allow the child to become trustee at a certain age or milestone, giving them control while still retaining the asset protection and other benefits of a trust.
However, if you die before the age of 75, any money held in your personal pension or defined contribution pension can be left to your beneficiaries as a tax-free income or tax-free lump sum.
Benefits stop when your child reaches age 18 unless that child is a student or has a disability.
You may inherit part of or all of your partner's extra State Pension or lump sum if: they died while they were deferring their State Pension (before claiming) or they had started claiming it after deferring. they reached State Pension age before 6 April 2016. you were married or in the civil partnership when they died.
Additionally, there's the risk of estate taxes and administrative complexities that can arise when a bank is notified of a death. Banks can insist on settling all debts before they release funds to heirs or beneficiaries.
Pension plans must be notified of the death, usually with a copy of the death certificate. If a survivor benefit was chosen, payments may continue to the spouse—often at a reduced amount (such as 50% or 75%). If no survivor option was selected, pension payments stop entirely.
Each scheme has different rules for what a member's beneficiaries might receive when they die. Most defined benefit schemes provide pension benefits to surviving spouses, civil partners, and dependent children. Someone receiving an income from an inherited pension pays tax under normal income tax rules.
Take cash lump sums
You can take your whole pension pot as cash straight away if you want to, no matter what size it is. You can also take smaller sums as cash whenever you need to. 25% of your total pension pot will be tax-free. You'll pay tax on the rest as if it were income.
(a) Pensioner can transfer his/ her pension account from one branch to another branch of the same bank within the same centre or at a different centre; (b) He/ She can transfer his/ her account from one authorized bank to another within the same centre (such transfers to be allowed only once in a year); (c) He/ She can ...