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Scottish Widows is one of the UK's leading pension providers, part of the Lloyds Banking Group. It offers personal pensions, workplace pensions, and SIPPs to millions of customers. When a Scottish Widows pension holder dies, the fund value can be paid to a nominated beneficiary or eligible dependant. These funds sit outside the estate and do not normally require probate.
In most cases, no. A Scottish Widows personal or workplace pension is a contract between the member and Scottish Widows, not a trust with a separate board of trustees: the scheme rules give Scottish Widows discretion over who receives the death benefit, and it is that discretion — not a will and not a grant — that decides where the money goes. Scottish Widows can pay the fund value directly to the person it selects without a Grant of Probate. (Where an employer has set its scheme up under trust, the employer's trustees make that decision instead; the practical effect for the family is the same.)
If there is no nomination and Scottish Widows cannot identify an appropriate beneficiary, the fund may be paid to the estate. In that case, probate may be required before the funds are distributed.
The death benefit is the full value of the pension fund at the date of death. For defined contribution pensions and SIPPs, this is the current market value of the investments held in the policy. Scottish Widows may offer beneficiaries the following options:
The options available will depend on the specific policy type. Scottish Widows will explain what is available when you contact their bereavement team.
Some Scottish Widows pension policies (particularly older with-profits or endowment-style policies) may also include a life assurance component. Check the original policy documents to see what is covered.
Scottish Widows asks pension holders to complete an expression of wishes form (nomination of beneficiary). This tells Scottish Widows who the member would like to receive the fund. It is not an instruction Scottish Widows must follow: it considers the nomination and then decides. That discretion is what has kept the fund outside the estate for inheritance tax purposes up to April 2027.
In practice, Scottish Widows almost always follows a valid, current expression of wishes. Problems occur when the form is outdated or missing. Members should review and update their nomination after any significant life event such as marriage, divorce, or the birth of a child.
See GOV.UK for the latest guidance on tax on pension death benefits.
Currently, Scottish Widows pension funds fall outside the estate and are not liable to inheritance tax. For deaths on or after 6 April 2027 that changes, and it is settled law rather than a proposal — the charge is in sections 66 to 71 of the Finance Act 2026. HMRC's policy paper of 26 November 2025 sets out the detail: personal representatives will be liable for reporting and paying any Inheritance Tax due on unused pension funds and pension death benefits, and they can direct a scheme administrator such as Scottish Widows to withhold up to 50% of the death benefits for up to 15 months from the date of death while the tax is settled. Death in service benefits from a registered pension scheme are excluded, as are dependants' scheme pensions from a defined benefit or collective money purchase arrangement, and the spouse, civil partner and charity exemptions are kept.
Read our detailed guide to pensions and inheritance tax from April 2027 and the inheritance tax rules for 2026/27.
If no expression of wishes is on file, Scottish Widows will use their discretion, typically considering whether there is a surviving spouse, civil partner, or financially dependent person. If no suitable beneficiary is found, the fund may be paid to the estate, which then becomes subject to the probate and estate administration process.