If you're over 55 and don't need your workplace pension to provide you with any income, keeping it invested and leaving it to your loved ones could be a good option. However, depending on how old you are when you die, your family could pay tax on the money they inherit.

How much tax will your family have to pay?

If you die before the age of 75

If you die after the age of 75

Anything left in your pension can be paid to your beneficiaries

Anything left in your pension can be paid to your beneficiaries

This could be paid as a lump sum or they can take regular withdrawals

This could be paid as a lump sum or they can take regular withdrawals

Any lump sum or withdrawals will usually be tax free, as long as they don’t go over your lifetime allowance*

Any lump sum or withdrawals will be subject to tax based on the individual tax position of the beneficiary

*Lifetime allowance rates may change and some individuals may have protection giving them a higher personalised lifetime allowance.

Other things to consider

In addition to your pension savings you may have other assets that you need to take into account when thinking about your retirement plans.

  • How much is your house worth?
  • Do you have any other savings and investments?
  • Are you expecting any other large windfalls or inheritances?
  • Do you have any other valuable assets?
  • Have you made a will or reviewed and updated it recently?

If you're thinking of keeping your pension invested, you should also consider updating your ‘Expression of Wish’ form if you haven’t looked at it for a while. This will help the scheme administrators determine who to pay your pension benefits to if you die.

The value of investments can go down as well as up, so you may get back less than you invest. Tax treatment and eligibility to invest in a pension depend on personal circumstances. All tax rules may change in future.

This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please refer to an authorised financial adviser.

Pension money cannot normally be withdrawn until age 55.

Our Workplace Investing Service Centre can explain what retirement income options are available within your existing pension plan and which are not. They can also refer you to our team of Workplace Investing Service Centre who can provide information on alternative options like retirement advice. Call us on 0800 3 68 68 73, Monday to Friday, 8am to 6pm.

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