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SSAS pension death benefits

When a SSAS member dies, the pension fund does not disappear. Family members and other nominated beneficiaries can receive it as a lump sum or as a continuing pension. How it is taxed depends on the member's age at death. Until 5 April 2027 unused pension funds generally sit outside the estate for Inheritance Tax, and from 6 April 2027 most are expected to be brought into it, which is why the way a scheme is structured now matters.

Reviewed June 2026 · 7 minute read

A common question among directors is what happens to the fund if a member of a SSAS dies. Family members and other nominated beneficiaries can receive the funds, and the scheme does not end with the member.

Who can receive the funds

The SSAS trustees decide who receives death benefits, and they will normally follow the member's written nomination. A member can nominate a spouse or civil partner, children, grandchildren, someone unrelated, or a charity. Benefits can be taken as a lump sum or left invested and drawn as a continuing pension, which is what allows a fund to pass on again to the next generation rather than being cashed out.

How death benefits are taxed

The member's age at death is the deciding factor. Where the member dies before age 75, benefits can generally be paid to beneficiaries free of Income Tax. Where the member dies at age 75 or over, beneficiaries pay Income Tax at their own rate on what they draw. The same test applies each time the fund passes on.

Inheritance Tax: now and from April 2027

Until 5 April 2027, unused pension funds generally sit outside the member's estate for Inheritance Tax. From 6 April 2027, under legislation before Parliament, most unused pension funds and death benefits are expected to be brought into the estate. Funds passing to a surviving spouse or civil partner are expected to remain exempt, as are gifts to charity. The detail is still being finalised, but the direction is clear, and anyone establishing or holding a SSAS should plan on that basis.

Does this change what a SSAS is for?

For most directors, no. What changes in April 2027 is the Inheritance Tax position, not the reasons a SSAS is worth having. It remains a member-controlled pension that can hold commercial property, lend to the sponsoring employer, and bring several family members into one scheme. What it does change is the value of deciding early how and when funds pass on, and how the pension sits alongside the rest of the estate. That is a conversation worth having before a scheme is established, not after.

This page explains how SSAS death benefits work in principle. What applies to you depends on your own circumstances, and the April 2027 Inheritance Tax changes are still being finalised. The structures we establish are governed by HMRC rules and, in the case of pension schemes, overseen by The Pensions Regulator. These are corporate structures and do not fall under FCA regulation. Holtram TLPI Ltd is registered with HMRC to form trusts, companies and to administer pensions.

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FAQs

Death benefits - frequently asked questions

Yes. If you die before taking benefits, the full value of your SSAS fund can be paid as a lump sum to one or more nominated beneficiaries. You nominate them by writing to the scheme administrator. For deaths before age 75, the lump sum is generally paid free of Income Tax. After age 75, lump sums are subject to Income Tax at the beneficiary's own rate. How the fund is treated for Inheritance Tax is changing from April 2027 - speak to TLPI to understand the current position and how to plan ahead.

A dependant's pension is an ongoing income paid from the SSAS to a surviving spouse, civil partner, common-law partner, child under 23, or financially dependent adult. It continues until the dependant dies or, for a child, reaches the age limit. The dependant's pension is subject to Income Tax in the usual way. The scheme rules and any nomination expression on file determine how the fund is split between multiple dependants.

This is changing. Until 5 April 2027, unused pension funds in a SSAS generally sit outside the member's estate for Inheritance Tax. From 6 April 2027, under legislation before Parliament, most unused pension funds and death benefits are expected to be brought into the estate. Anyone holding or establishing a SSAS should plan on that basis rather than the outgoing position. Speak to TLPI to understand what this means for your situation.

There is no restriction on who you can nominate in writing. Most members nominate a spouse, children, or other family members. You can also nominate a charity or a trust. The scheme trustees exercise discretion over how the fund is distributed, taking into account your written nomination, any dependants' needs, and the scheme rules. Keeping your nomination expression up to date is important, particularly after changes in family circumstances.

What the April 2027 change means for your scheme

From April 2027 the way pensions are treated for Inheritance Tax changes, and what that means for you depends on how your scheme is set up and who you have nominated. If you would like to look at other options such as a Family Investment Company, we can talk that through as well.

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