The pension is often the largest thing the person owned, and it is the one asset the will usually cannot touch. That single fact explains most of the confusion that follows a death.
The pension usually sits outside the will
A pension pot is normally held in trust by the scheme rather than owned outright, so it sits outside the estate. HMRC confirms that position by describing what is changing: most unused pension funds and death benefits will be brought within the value of a deceased person’s estate from 6 April 2027 (HMRC, Inheritance Tax on Pensions: technical Note 2, checked 1 November 2026).
Executors have no authority over it, and a beneficiary under the will has no claim to it as of right. The scheme decides, and the nomination form is evidence of what the member wanted rather than an instruction. GOV.UK puts the discretion plainly: the person who died will usually have nominated you, but sometimes the provider can pay the money to someone else, for example if the nominated person cannot be found or has died (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026).
That cuts both ways for families. A form filled in before a divorce can send money to an ex-spouse, and a form never filled in at all leaves the trustees deciding between the people who were financially dependent.
Tax turns on the age at death
The dividing line is 75, and it applies to the person who died rather than the person inheriting. Where they died under 75, GOV.UK’s table gives most lump sums as no tax, unless the lump sum is above the pension pot owner’s lump sum and death benefit allowance (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026).
Where they were 75 or over, the position reverses. GOV.UK’s table gives Income Tax deducted by the provider for most lump sums, and for annuity or drawdown income taken at 75 or over (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026). Some older drawdown funds are taxed whatever the age at death, so check which type the scheme holds. The rate is the recipient’s own, so a large lump sum taken in one tax year can be taxed far more heavily than the same money drawn over several.
The 13-month deadline
There is a reporting deadline on the estate, and missing it is expensive. GOV.UK says the person dealing with the estate must tell the pension provider within 13 months of the death, or 30 days after they realise tax is owed, whichever is later (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026).
Miss it and the consequence is not a penalty but a tax charge: tax becomes due on the whole lump sum where it is paid more than two years after the provider was told (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026). Tracing pensions early therefore matters for tax, not only for tidiness.
Defined benefit schemes pay dependants, not whoever is named
A salary-related pension works differently. What the scheme pays is a survivor’s pension, and the rules define who qualifies. GOV.UK says a pension from a defined benefit pot can usually only be paid to a dependant of the person who died, for example a husband, wife, civil partner or child under 23 (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026).
Paying somebody outside that group is possible but punitive. GOV.UK says it can sometimes be paid to someone else if the scheme’s rules allow, but it will be taxed at up to 55% as an unauthorised payment (GOV.UK, Tax on a private pension you inherit, checked 1 November 2026).
Unmarried partners are where this lands hardest. Many schemes pay a partner who was financially dependent, and the evidence the trustees want is the practical kind: a joint mortgage, shared bills, a shared address over years.
Death in service
A death in service lump sum comes from the employer’s scheme rather than from savings. It is paid at the trustees’ discretion in the same way as a pot, so the nomination form held by the employer is the document to find first, and the employer’s HR team is where the claim starts.
It also has a distinct tax future. From 6 April 2027, all death in service benefits payable from a registered pension scheme are to be excluded from the value of an individual’s estate for Inheritance Tax purposes (HMRC, Reforming Inheritance Tax — unused pension funds and death benefits, checked 1 November 2026).
What changes on 6 April 2027
The exclusion that keeps pensions out of Inheritance Tax is ending for most other pension money. HMRC says the government will bring most unused pension funds and death benefits into scope of Inheritance Tax from 6 April 2027 (HMRC, Reforming Inheritance Tax — unused pension funds and death benefits, checked 1 November 2026).
The reporting duty moves as well, which matters to anybody who will be an executor. From that date, personal representatives will be liable to report and pay any Inheritance Tax due on unused pension funds or death benefits (HMRC, Reforming Inheritance Tax — unused pension funds and death benefits, checked 1 November 2026). Our page on pensions and Inheritance Tax from April 2027 sets out what that means for a family deciding what to do now.
The State Pension after a death
The State Pension stops at the date of death, and anything covering days after it has to go back. Where a payment arrived before the department was told, GOV.UK says DWP Debt Management will contact the next of kin, the bank the benefit was paid into, and whoever is handling the estate (GOV.UK, Benefit overpayments: repayments when someone has died, checked 1 November 2026).
Money may also be owed the other way, for a period before the death. Report the death first, which Tell Us Once does for most departments including the Department for Work and Pensions (GOV.UK, What to do after someone dies: tell Us Once, checked 1 November 2026), then ask the Pension Service to confirm in writing what was paid and what was owed up to the date of death.
What to do in the first weeks
Find the schemes before anything else: old employers, the Pension Tracing Service, and any paperwork about transfers. Then write to each one with the death certificate, ask what death benefits are payable, and ask for a copy of the nomination form they hold, because that tells you who the trustees will be considering.
Do not promise anybody a share of it. Until the trustees decide, nobody is entitled to the money, and saying otherwise early can start a family dispute that did not need to happen. For the assets the will does control, see finding the assets.