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The People's Pension is one of the UK's largest workplace pension providers, used by millions of employees across many sectors. It is a defined contribution (DC) scheme — members and their employers contribute to a pot that grows over time. When a member dies, the value of that pot can be paid to their nominated beneficiary or next of kin. These funds sit outside the estate and do not normally require probate.
In most cases, no. The People's Pension is structured as a discretionary trust. The trustees can pay the pension pot directly to the nominated beneficiary without requiring a Grant of Probate. The funds fall outside the estate because the member had no absolute right to direct payment.
If there is no nomination and The People's Pension cannot identify a suitable beneficiary, the funds may be paid to the estate. In that case, probate may be needed before the funds are released.
The death benefit is the full value of the member's pension pot at the date of death — including all contributions from the member, employer, and government (tax relief), plus any investment returns. There is no separate formula — the pot is simply worth whatever it is at the time of death.
The People's Pension pays the death benefit as a lump sum. It does not provide an ongoing survivor's pension in the way a defined benefit scheme does. If you need an ongoing income, the lump sum would need to be invested or used to purchase an annuity independently.
Some employers may provide a separate death-in-service benefit alongside The People's Pension. This is a separate payment made by the employer's group life insurance policy, not part of the pension pot.
Members of The People's Pension can nominate a beneficiary through their online account. This nomination of beneficiary tells the trustees who the member would like to receive the pension pot. The trustees will consider the nomination carefully, but they retain discretion — they are not legally required to follow it.
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This discretionary structure is what keeps the pot outside the deceased's estate for IHT purposes. In practice, trustees almost always pay to the nominated beneficiary where a valid nomination is in place. Difficulties arise when the nomination is out of date or missing entirely.
Encourage members of The People's Pension to log in to their account and check or update their nomination — it takes only a few minutes and can save significant difficulty for bereaved families.
The People's Pension will provide information on the tax position when making the payment. For the full picture, see GOV.UK's guidance on tax on pension death benefits.
Currently, The People's Pension pot falls outside the estate and is not subject to inheritance tax. From 6 April 2027, the government proposes to bring unspent DC pension funds within the scope of IHT. This means the pot value may be counted when calculating the estate value for inheritance tax purposes.
This change could affect many families where the deceased had a substantial People's Pension pot and an estate close to the nil-rate band. Read our guide to pensions and inheritance tax from April 2027 for a full explanation.
If there is no nomination on record, The People's Pension trustees will use their discretion, looking at who was financially dependent on the deceased. If no suitable beneficiary is found, the pot may be paid to the estate, making it subject to the probate and estate administration process.
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