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NEST (National Employment Savings Trust) is the workplace pension scheme set up by government to support auto-enrolment. It is a defined contribution scheme — members build up a pot of money over their working life. When a NEST member dies, the value of their pot is paid out. Whether it falls outside the estate depends on which of NEST's two beneficiary options the member used, and the difference matters more than most families realise.
It depends on which option the member used. NEST is a trust-based master trust, and where the member left an expression of wish the payment is discretionary: NEST decides, taking those wishes into account, and can pay a beneficiary directly without a grant of probate.
Where the member instead made a nomination, NEST is bound by it — "we'll pay your pot only to who you tell us to" — and NEST states that in that case the pot "will usually form part of your estate for inheritance tax purposes". The two routes have opposite tax consequences, so it is worth asking NEST which one is on file.
If neither is on file, NEST says it will contact whoever is dealing with the estate and pay the pot to the estate; where the pot is £5,000 or under it may pay certain relatives instead. If it goes to the estate, probate may be required before the funds can be distributed. See our guide on the probate threshold to understand when probate is triggered.
NEST is a defined contribution scheme, so there is no lump sum formula — the death benefit is the value of the member's pot at the date of death, including all contributions and investment growth. There is no minimum or maximum; it is simply whatever the pot is worth.
NEST does not pay an ongoing survivor's pension of its own. Ask NEST what payment options are available to the beneficiary in the particular case rather than assuming a lump sum is the only one.
Some employers also provide a separate death-in-service benefit — this is paid independently and is not part of the NEST pot. Check with the employer's HR department if you think this may apply.
NEST does not publish a target timescale for bereavement claims. Ask for one when you notify them rather than working to an assumed figure.
NEST members can record beneficiaries through their online account, and NEST asks them to choose between two mechanisms that behave very differently.
An expression of wish is not binding. NEST says it will "take your wishes into account when deciding who to pay your pension pot to" and will "consider any changes to your personal circumstances before making a payment". NEST's own worked example has a member who divorced and remarried without updating the form, and the pot being paid to the estate rather than to the original nominee. Because the decision is NEST's, the pot is not usually counted as part of the estate for inheritance tax.
A nomination is binding: NEST will pay the pot only to the named person. That certainty comes at a cost — NEST states that the pot will then usually form part of the estate for inheritance tax purposes.
Whichever route was used, problems arise when:
Members should keep the form 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 form may be out of date, contact NEST directly and explain the circumstances.
For detailed guidance, see GOV.UK's page on tax on a private pension you inherit.
From 6 April 2027 most unused pension funds and death benefits come into the estate for inheritance tax, and a NEST pot is squarely within that. HMRC's policy paper of 26 November 2025 confirms the change applies whether or not the scheme administrator or trustee has discretion over the payment, so the expression of wish route will no longer keep the pot outside the estate. Death in service benefits payable from a registered pension scheme are excluded, but a NEST pot is not one of those.
The spouse, civil partner and charity exemptions are kept, so a pot passing to a surviving spouse or civil partner is still exempt. Personal representatives, not scheme administrators, are liable for reporting and paying any inheritance tax due, and can direct a scheme to withhold 50% of the benefit for up to 15 months while that is settled. 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.
Where nothing is on file, NEST says it will contact whoever is dealing with the estate and pay the pot to the estate. Where the pot is £5,000 or under, NEST may pay it to certain relatives instead.
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.