What Happens to a NEST Pension When Someone Dies?

What happens to a NEST pension when someone dies?

1NEST pension death benefits bypass probate — the fund is paid at NEST's discretion to the nominated beneficiary, not under the will
2NEST is a defined contribution (DC) scheme — the full pot value is paid out as a lump sum to nominated beneficiaries or dependants
3The nomination of beneficiary form on NEST's website determines who is considered — NEST trustees have discretion but usually follow a valid nomination
4If the member died before age 75, the payout is usually tax-free; if after 75, the recipient pays income tax at their marginal rate
5From April 2027, unspent NEST pension pots will count towards the estate for inheritance tax — a significant change for all DC pension holders

NEST (National Employment Savings Trust) is a workplace pension scheme set up by the government to support auto-enrolment. It is a defined contribution (DC) scheme — members build up a pot of money over their working life. When a NEST member dies, the value of their pot can be paid to their nominated beneficiary or next of kin. NEST pension funds fall outside the estate and do not normally require probate.

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Does a NEST Pension Require Probate?

In most cases, no. NEST is set up as a discretionary trust. The trustees have the power to pay the death benefit directly to the nominated beneficiary without the need for a Grant of Probate. The funds sit outside the estate because the member had no absolute right to direct who received them.

However, if there is no nomination and NEST cannot identify a suitable beneficiary, the funds may be paid to the estate. In that case, probate may be required before the funds can be distributed. See our guide on the probate threshold to understand when probate is triggered.

What Death Benefits Does NEST Pay?

NEST is a defined contribution scheme, so there is no defined lump sum formula — the death benefit is the full value of the member's pension pot at the date of death, including all contributions and investment growth.

NEST does not pay an ongoing survivor's pension — the death benefit is paid as a lump sum only. There is no minimum or maximum to the amount; it is simply whatever the pot is worth when the member dies.

Some employers also provide a separate death-in-service benefit — this is paid independently and is not part of the NEST pension pot. Check with the employer's HR department if you think this may apply.

How to Claim NEST Death Benefits

Contact NEST. Call 0300 020 0090 or visit nestpensions.org.uk to notify NEST of the death. You will need the member's NEST member number or national insurance number.
Provide a certified copy of the death certificate. NEST will need this to begin the claims process.
NEST will review the nomination. If a valid nomination of beneficiary is on the member's account, NEST will contact the nominated person. If no nomination exists, NEST will consider who it is appropriate to pay.
Complete the claim forms. The nominated beneficiary will need to provide identification and bank details for payment.

NEST aim to process bereavement claims promptly once all required documentation is received. Complex cases involving discretion may take a little longer.

The Nomination Form: Why It Matters

NEST allows members to nominate a beneficiary through their online account. This nomination of beneficiary form tells the NEST trustees who the member would like to receive the pension pot.

The trustees will consider the nomination carefully but are not legally bound by it — this is what keeps the pot outside the estate for IHT purposes. In practice, NEST almost always pays to the nominated beneficiary where a valid nomination exists. Problems arise when:

No nomination form was completed
The nominated person has since died
The nomination names a former partner after a separation

Members should keep their nomination up to date — it takes just a few minutes online. If you are dealing with the estate of someone who had a NEST pension and believe the nomination may be out of date, contact NEST directly and explain the circumstances.

Tax on NEST Death Benefits

Death before age 75: The lump sum is normally paid tax-free to the beneficiary, provided it is within the lump sum and death benefit allowance (currently £1,073,100 for the combined lump sum allowance). Any amount above the allowance may be subject to a tax charge.
Death at age 75 or over: The lump sum is taxed as income for the recipient at their marginal rate (20%, 40%, or 45%). This can result in a substantial tax charge on larger pots.

For detailed guidance, see GOV.UK's page on tax on pension death benefits.

IHT and NEST Pensions From April 2027

Currently, NEST pension pots fall outside the estate and are not liable to inheritance tax. This is set to change. From 6 April 2027, the government proposes to bring unspent pension funds — including DC pots like NEST — within the scope of inheritance tax. This means the value of the NEST pot at death may be added to the estate value when calculating whether IHT is due.

This is a significant change, particularly for those with larger NEST pots or whose estate is already near the nil-rate band threshold. Read our detailed guide to pensions and inheritance tax from April 2027 for a full explanation of what is changing.

Understanding inheritance tax basics and the current IHT rules for 2026/27 will help you assess the potential impact.

If There Is No Nomination Form

If the deceased had no nomination of beneficiary registered with NEST, the trustees will exercise discretion. They will typically seek to identify any surviving spouse, civil partner, or financially dependent person. If no suitable beneficiary can be identified, NEST may pay the fund to the estate.

If the pot is paid to the estate, it becomes part of the assets for probate and estate administration purposes and may be subject to inheritance tax.

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