Because they’re highly regulated and restrictive accounts, transferring a pension to another person isn’t usually straightforward. However, there are certain situations where pension benefits can be transferred or shared with another person.
Here, we’ll explain when pensions can be transferred to another person, who you may be able to transfer to, the tax implications, and alternative strategies for transferring your wealth.
Can you transfer a pension to another person?
In normal circumstances, you cannot transfer ownership of your pension directly to another person. A pension is held in your name and subject to strict pension rules and legislation, which means you can’t simply transfer it to someone else.
That said, there are a few exceptional circumstances where pension benefits may transfer to another person or be split:
Transferring a pension at death
While not a transfer during your life, you can nominate who should receive pension benefits if you die. If the worst happens, your pension can transfer to your nominated beneficiaries. This might include a spouse, civil partner, children, or other dependants.
Depending on your type of pension and how old you are when you die, beneficiaries may receive a lump sum, drawdown income, or an annuity.
Some pensions allow ongoing income payments to dependants or nominated beneficiaries after death rather than a full transfer of ownership upfront.
Transfer due to divorce or dissolution of a civil partnership
During a divorce, a court can issue a pension sharing order (PSO), which transfers a percentage of one person’s pension into a pension arrangement for their former partner.
There’s also a less common arrangement called pension attachment (earmarking), where part of the pension income is paid to the ex-partner when benefits are eventually taken.
Who can your pension be transferred to?
Where transfers or benefit payments are allowed, they are typically limited to specific categories of people:
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Spouse or civil partner
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Children or grandchildren
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Financial dependants
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Other nominated beneficiaries (depending on scheme rules)
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Former spouse or partner (in divorce settlements)
Modern pensions, particularly defined contribution (DC) schemes, often allow you to nominate almost anyone as a beneficiary, although certain pension providers may have specific rules.
How to transfer a pension to another person
The process of transferring a pension to someone else depends entirely on the reason for the transfer. For example, here’s how the process might look in some of the acceptable scenarios:
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After death: Your beneficiaries contact the pension provider and submit claim forms and supporting documents.
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Divorce: A pension sharing order is implemented by the pension provider following a court decision.
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Beneficiary drawdown: The provider sets up an inherited pension arrangement for the recipient.
Because pension transfers involving another person often involve legal and tax considerations, professional advice is usually recommended before any decisions are finalised.
Speaking to an adviser for a pension review also allows you to fully understand the mechanics behind your particular pension transfer to another person.
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Tax implications to consider when transferring
The tax treatment when transferring pension benefits to another person depends on how the transfer happens, your age, and whether the pension is accessed during your lifetime or after death.
Understanding the tax consequences is important before you make any permanent decisions.
Tax when pensions are inherited after death
If pension benefits are passed to your beneficiaries after death, the tax treatment usually depends on the age at which you passed away.
If death occurs before age 75, pension benefits can often be paid to beneficiaries tax-free, either as a lump sum or through drawdown income, provided payments are made within the required time limits.
However, if your death occurs after age 75, withdrawals are typically taxed as income at the beneficiary’s marginal tax rate.
Tax on divorce pension sharing
A pension sharing order itself is not normally treated as a taxable event when it’s implemented.
However, when the receiving spouse or partner later withdraws money from their pension, it will be taxed under the standard pension income rules at that time.
So, this basically means tax is deferred rather than avoided entirely.
Tax when withdrawing to gift money
If you withdraw pension funds during your lifetime in order to give money to someone else, those withdrawals may be subject to income tax. This would also apply if you chose to withdraw and transfer your pension into an ISA.
Large withdrawals in a single tax year could push you into a higher tax band, increasing your tax obligations. There may also be implications for your future pension contribution allowances if taxable income is taken (MPAA).
Because of this, withdrawing funds purely to gift money is often less tax-efficient than leaving pension benefits to beneficiaries after death.
Inheritance tax considerations
Pensions are currently held outside your estate for inheritance tax (IHT) purposes, which means they can be passed on more tax-efficiently than many other assets.
However, inheritance tax rules around pensions are evolving, and from April 2027, it may be the case that your pension falls within your estate, meaning anything you transfer down to your family after death could be subject to a 40% tax.
Professional advice can help ensure you’re able to explore alternative estate planning strategies, like making use of trusts and creating the most tax-efficient structure based on the current rules.
How pensions can be split
There are three main ways pensions may be divided between people:
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Pension sharing orders: This is the most common method during a divorce. A percentage of the pension is transferred into a new pension in the recipient’s name, giving them full control over their share.
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Pension attachment (earmarking): Part of the pension income or lump sum is paid to the former spouse when the original pension holder takes benefits. Ownership remains with the original member.
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Death benefit distribution: Beneficiaries receive pension funds or income after the pension holder dies, based on nominations and the discretion of the provider.
Each approach has different legal and tax consequences, so specialist advice is often invaluable.
Alternative options and other transfer strategies
If your aim is to help someone financially using your pension wealth, directly transferring a pension is rarely possible or the most efficient route. Instead, you might want to consider these alternatives:
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Paying into someone else’s pension: You can contribute to another person’s pension, such as a spouse, partner, or child (with a junior SIPP). Contributions may still qualify for tax relief (subject to rules), making this a tax-efficient way to support someone’s future retirement without a transfer.
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Gifting money outside your pension: You could withdraw money from your pension and gift it directly, but withdrawals may be taxed as income and could affect your tax band for that year. It’s important to consider the impact on your own retirement income before doing this.
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Using trusts and estate planning strategies: In more complex situations, trusts and coordinated estate planning may help control how wealth is passed on. Professional advice is usually recommended to ensure everything is structured efficiently and aligns with your goals.
Get independent pension transfer advice today
Deciding how to transfer your pension benefits to another person is rarely simple, especially when tax rules, legal considerations, and long-term retirement security are involved. So, it’s well worth getting professional guidance before making any decisions.
Here’s why people trust us to help them explore their pension transfer options:
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Our advisers are independent, giving you the widest choices
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Free initial pension chat with no obligation to proceed further
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Get tailored advice based on your pension transfer goals
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Access to pension specialists experienced in complex transfers
If you’d like a free, no-obligation conversation with an FCA-regulated pensions adviser about transferring or sharing pension benefits, you can get started here.
FAQs
Yes. You can contribute to someone else’s pension, such as a spouse, partner, or child. Tax relief may still apply, subject to contribution limits and other rules.