What happens to your pension if you die before retirement?

What happens to your pension if you die before retirement?

Assuming you die before you retire, in most cases the entire value of your pension fund can be paid to your beneficiaries free of tax. This can result in your beneficiaries receiving substantially less than they could have received if the pension plan had been restructured before death.

Is a pension better than a 401k?

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Pension investments are controlled by employers while 401(k) investments are controlled by employees. Pensions offer guaranteed income for life while 401(k) benefits can be depleted and depend on an individual’s investment and withdrawal decisions.

What happens to your pension if you die?

The scheme will normally pay out the value of your pension pot at your date of death. This amount can be paid as a tax-free cash lump sum provided you are under age 75 when you die. The value of the pension pot may instead be used to buy an income which is payable tax free if you are under age 75 when you die.