What happens to your pension savings when you die depends on several factors, including whether you’ve reached retirement age, the type of pension you have, your marital status and the beneficiaries you have nominated. Strap in, this is quite complicated… but here’s what you need to know…
What happens to your state pension?
It depends on whether you get the old or new state pension.
If you reached state pension age before 6 April 2016, you are on the old state pension. You may be able to inherit some of your spouse or civil partner’s state pension when they die.
If you don’t have a full national insurance record, you could top it up with your partner’s eligible years – increasing your basic state pension.
You may also be able to inherit part (generally 50%) of your spouse or civil partner’s additional state pension or graduated retirement benefit.
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Contact the Pension Service to check what you can claim.
Children or cohabiting partners are not entitled to anything.
If you are on the new state pension, so post 6 April 2016, you can’t make a claim for their national insurance qualifying years.
However, if your partner built up more than the full amount of state pension, the additional amount is a “protected payment”, half of which can be passed to your wife or husband.
Private pensions – defined benefit
Defined benefit pensions are now generally only available from public sector or older workplace pension schemes.
This type of pension pays a retirement income based on your salary, and how long you made contributions to your employer’s pension scheme.
If this is the pension you have, the money paid to your beneficiaries will be outlined in the scheme’s rules but often a spouse will receive around 50% of the money.
If your children are under 23 and in full-time education, or mentally or physically impaired, they may also be eligible to get a percentage of the pension you were getting (or were due to get, if…
