What happens to my pension when I die?

We often talk about what to do with our pension when we are alive. But, what happens to your pension when you die? It actually depends on two factors: What kind of pension you have, and whether you are already retired or not. 


It’s the stage where you are still working, or otherwise aren’t taking your pension benefits yet.

Company Pension Schemes

If you’re in a company pension scheme, you should check their rules, as every scheme can be a little bit different. Depending on what kind of contract you have with your pension provider, your family might get a Death in Service benefit as a lump sum if you die. If your company provides for an annuity when you retire, like many Defined Benefit Pension Schemes, your spouse may be entitled to a percentage of the pension you would have received.

Personal Retirement Savings Accounts (PRSAs)

If you happen to die before retirement, then the value of your PRSA fund will be transferred tax free to your estate. Also, the person who inherits this fund may be required to pay inheritance tax. Learn more about it here. However, you should know that inheritances between legal spouses are tax-free. Therefore, if your husband for instance inherits your fund, they won’t have to pay any inheritance tax on it. 

Personal Pensions / Retirement Annuity Contracts (RACs)

Like a PRSA, the value of your Personal Pension fund will be transferred tax-free to your estate. Again, the question of the inheritance tax comes into play, like with PRSAs.

Personal Retirement Bond (PRB)

Sometimes, when you transfer your retirement fund out of a company scheme, it may be placed in a Personal Retirement Bond. You can’t make any more contributions to a PRB, but you can control how it’s invested. Also, with this type of pension fund, you are able to take your pension benefits from age 50 onwards. 

If you die before retirement, the value of the PRB fund should be transferred to your estate like PRSAs and Personal Pensions. The inheritance tax implications are the same as above.


After Retirement:

This is when you are taking your private retirement benefits and enjoying the money of your fund. However, you may not be receiving the State Pension yet, if you are under 66 and have taken early retirement.

How your pension is distributed when you retire: 

  • You get a 25% tax free lump sum
  • Your lump sum will be inherited as part of your estate. 
  • There may be inheritance tax due, depending on who inherits your estate.


This is most common with Defined Benefit Pension Schemes. As a member of this scheme, you can nominate  your spouse as a receiver of your pension when your die (a % of your pension). 

You should know that annuities often have a Guarantee Period of up to 5 years. If you die within the first five years, your family will receive either a lump sum, or an income payment. For example, your annuity pays you €20,000 p/a. You die a year after retirement, so your family will be paid €20,000 each year for 4 years. 

Approved Retirement Fund

You can leave these funds directly to your spouse, and they can be transferred into an ARF in their own name. Otherwise, the fund is wound up and transferred directly to your estate as cash. The ARF provider will deduct any income tax due before transferring to your estate. It’s important to know that legal spouses don’t pay income tax on a transfer to their own ARF, but they do if the fund is paid out to the estate. They also don’t have any inheritance tax.

Adult children over 21 will have an income tax liability of 30%, regardless of the fund size, but are also exempt from Inheritance Tax.

However, children under 21 who inherit an ARF will have no income tax liability, but will be subject to Inheritance Tax. 

How we can help with your pension fund


  • Help you set up a pension for free
  • Review your old pension and help you change if necessary
  • Check your current pension and see if they are at your best advantage
  • Evaluate if you can invest more money for your retirement
  • Help you turn your money into income at retirement.



    Greenway Financial Advisors Limited is regulated by the Central Bank of Ireland. Registered No. C168372

    Debbie Cheevers

    Debbie Cheevers

    Qualified Financial Advisor

    Debbie was born in Dublin and graduated from NCAD with a degree in Visual Communication. She brings a strong customer services background to Greenway.

    Debbie qualified as APA in 2017 and a fully qualified financial advisor (QFA) in 2018.

    She believes that product knowledge is key to helping customers make the right choices.