Fate of Money Purchase Pensions in the Event of Death

What Happens if You Die Before Retirement?

If you're a member of a money purchase scheme and you die before you retire, then your pension fund will be refunded to your estate or your chosen beneficiary. If the scheme is contracted-out of the State Second Pension (formerly SERPS or the State Earnings Related Pension Scheme ), then some of the benefit will normally be used to provide an income for your spouse or civil partner. If your scheme includes insurance cover, then your beneficiaries may also receive a lump sum benefit.

What Happens if You Die After Retirement?

The majority of pension schemes have a guarantee period (normally 5 years, but sometimes 10); if you die within that period after you've retired, the balance of the guarantee period is paid, sometimes as a lump sum, to your estate or to the person you nominate. There may also be a pension payable to your spouse or civil partner, usually for the rest of their life.

If your fund is used to buy an annuity, you can normally choose the level of pension payable to your partner if you die, up to two-thirds of the maximum pension the scheme could have provided for you.