When someone dies, one of the first things the Executor of a will or Administrator of an estate needs to do is deal with that person’s pension or – potentially – pensions. The steps you need to take depend on whether you are dealing with a state, personal or workplace pension and whether the person was drawing down a pension at the time of their death.
Knowing what pension(s) a person was receiving
Hopefully, the person who has died will have left a full list of their assets and any important documentation, including on their pension(s), in an easy to access place. However, this isn’t always the case, and you will need to do some digging to find out about their pension(s).
If a person was drawing a pension, the best place to start is their bank accounts. From these, you should be able to quickly identify which pension schemes have been paying them an income. If they weren’t drawing a pension, you will need to go through their paperwork, looking for any correspondence that can help you. You could also contact their current or former employer(s).
You can use try Pension Tracing Service to find out the contact details for any pension scheme operating in the UK or track down any pensions a deceased person might have held.
What to do with a State Pension
If the person who died was receiving a state pension, the first thing you need to do is call the Pension Service on 0345 606 0265 to let them know. The Pension Service will stop their pension but also calculate if there are any extra payments due to the deceased’s spouse or civil partner. Extra payments are calculated base on the amount of National Insurance contributions they made before they reached state pension age.
If you don’t tell the Pension Service in time and additional payments are made to the person after they’ve died, these will need to be paid back. If they aren’t paid back, the Pension Service can make a claim against the estate.
What to do with a personal or workplace pension
Each personal or workplace pension will have a Scheme Administrator or Pension Provider. You will need to contact them to let them know about the person’s death whether they had begun receiving a pension or not. You will need to provide a copy of the death certificate and complete a nomination form if you are entitled to receive death benefits.
Once you have completed any necessary paperwork and submitted this to the Scheme Administrator, they’ll write to you to let you know what happens next. This might include making a lump sum payment to any financial dependents or what will happen if any beneficiaries are entitled to survivor’s pension payments.
If the person was employed, their employer may have already informed the pension scheme, but you can’t make this assumption, so it is much better to contact them yourself rather than risk having to make repayments or facing any unnecessary delays in death benefits.
Lump sum payments
The amount of a lump sum payment will depend on the pension’s rules and whether the person was paying into the scheme at the time of their death. They are normally tax-free and can include:
- Life cover, though this is normally only for active members
- A refund of contributions if a member dies and has not yet drawn a pension
- A pension protection lump sum if a member was already being paid an annuity when they died
- The value of the pension pot for members of a defined pension scheme.
When a person signs up for a pension, they generally complete an expression of wishes form or nomination of benefits letter outlining who will receive any lump sum in the event of their death. Pension providers can choose to pay the lump sum out differently if they feel the information they hold is out of date for example.
Survivor’s pension payments
In some cases, a spouse or civil partner will be eligible for what are known as survivor’s pension payments. This includes where there is a joint life annuity, or as part of a defined benefit pension scheme. In both cases, the payments will generally be lower than the deceased person’s pension payments and are often reduced by half.
While not a survivor’s pension payment, if the deceased person had a guaranteed period attached to a single life annuity, their beneficiaries will continue to receive annuities for a set period, usually five or ten years.