What happens to your pension when your life changes?

What happens to my pension if I get divorced?

Pensions can be one of the biggest assets in a relationship, and can sometimes be worth more than the family home if you own one – so definitely not one to be overlooked.

What happens to my pension if I move abroad?

Moving overseas doesn’t mean you lose your UK pension – but it can affect how you pay in, take money out, and how much tax you pay. There's also a distinction between whether it's your State Pension or a private or workplace pension you've built up.

State Pension

The full new State Pension is currently £241.30 a week (for 2026/27), though this depends on how many qualifying years you've built up – there's more on how it works in our State Pension guide.

When you're in the UK, your State Pension entitlement increases each year in line with the 'triple lock', which is designed to ensure it doesn't lose value over time.

You can still claim your UK State Pension if you move overseas, though if you’re entitled to a top-up through Pension Credit, this entitlement will stop if you move abroad permanently.

Whether you'll get the annual increases to your State Pension amount will depend on where you move to:

• Move to another country in the European Economic Area (EEA), Gibraltar or Switzerland: You’ll typically still receive these annual increases to your State Pension.

• Move to a country that has a social security agreement with the UK: You'll also get the increase each year. This includes Jamaica, the Philippines, Turkey and the USA.

• Move elsewhere: Your pension may be frozen at the rate you first receive it, without annual increases. Common countries where your UK State Pension will be frozen include Australia, Canada, New Zealand, South Africa and India. This means over time, your State Pension will lose value in real terms.

Private or workplace pension

If you've got a UK workplace or private pension, and you move abroad (either permanently or temporarily) the pension is still yours. It remains invested, under your name, and managed by your pension provider.

However, moving overseas can have tax implications when you start taking money from your pension (you can do this from age 55, increasing to 57 from 6 April 2028).

If you become resident in a country outside the UK, that country might tax your UK income. However, if there’s a double-taxation agreement, you can usually ask HMRC to apply relief on the UK tax – so you'd only pay tax in your country of residence under its rules (and avoid being taxed twice).

BUT if the country you've moved to doesn't have a tax agreement in place, you could end up paying tax on your pension in the UK as well as where you're now living.

If you have permanently moved abroad your UK bank may insist you close your account. You may need an international account – these often have minimum balance requirements and higher charges than UK current accounts.

We've got everything you need to know on this in our full Moving overseas with a pension in the UK – what you need to know guide.

What happens to my pension if I become self-employed?

Becoming self-employed doesn’t affect any pension savings you’ve already built up. Any existing pensions stay where they are, remain invested, and can still be accessed from age 55 (increasing to 57 from 6 April 2028). You don’t need to move or change them just because your employment status has changed.

The key difference is that you’re now responsible for your own pension savings. When you’re employed, you’re typically auto-enrolled into a workplace pension and your employer must contribute alongside you. Once you’re self-employed, you'll no longer get any employer contributions – so it’s up to you to decide how much to save.

One option is to set up your own pension that you contribute to and manage yourself, such as a Self Invested Personal Pension (SIPP). Your contributions are still boosted by tax relief – for example, an £80 contribution is topped up to £100 – and higher-rate taxpayers can claim extra tax relief through self-assessment. You can usually contribute up to 100% of your earnings each year, subject to the maximum annual allowance, which is £60,000 for 2026/27.

Many people who are self-employed can have an irregular income. This might mean you approach your contributions flexibly: increasing contributions in good months or years, and reducing or pausing them when money is tight. While this approach can be helpful, it also makes it easier to fall out of the habit of saving – so you'll need to be strict with yourself and make it a priority as part of your self-employment.

Pensions are very tax-efficient, but the money is usually locked away until later life. If your income is uncertain, some people choose to balance pension saving with more flexible options like ISAs, so they have access to funds if needed.

Don't forget your State Pension

It’s also important not to overlook your State Pension. If you're self-employed, you’re responsible for paying your own National Insurance contributions. These help build your entitlement to the State Pension, so if you're not earning much, it’s worth checking whether you’re getting enough contributions, or if you might need to top up voluntarily to avoid gaps.

What happens to my pension if I take a career break?

Taking a career break – whether for caring responsibilities, travelling, or simply time out – won’t affect the pension you’ve already built up. Your existing pension stays where it is, continues to be invested, and can still grow over time. You don’t need to move it or make any changes just because you’ve stepped away from work.

The main impact is on new contributions. If you’re no longer earning, contributions from both you and your employer will usually stop, which can create a gap in your pension savings. That said, if your break is linked to things like maternity, paternity or adoption leave, your employer may continue contributing for a period – depending on your contract and how you’re paid during that time. See Maternity and paternity leave: your rights and pay for more.

Even if you’re not working, you may still be able to keep your pension ticking over. Non-earners or low earners can pay into a pension and still get tax relief on contributions of up to £2,880 a year (which is topped up to £3,600).

If you do have some earnings during your break – for example from part-time or freelance work – you can usually contribute more, up to 100% of your earnings (subject to the maximum annual allowance, which is typically £60,000 for most people).

Consider the impact on your State Pension

The State Pension is based on your National Insurance (NI) record, and gaps during a career break can reduce what you eventually receive. However, you may still get NI credits in certain situations – for example, if you’re claiming Child Benefit for a child under 12 or receiving certain benefits such as Carer’s Allowance. If not, you might want to consider making voluntary NI contributions to avoid gaps.

It’s also worth thinking about the longer-term effect. Even a relatively short break can have a knock-on impact, as missing contributions now means less time for your savings to grow. That doesn’t mean you’ve done lasting damage, but it may mean you need to contribute a bit more when you return to work to stay on track.

Career breaks can make it easier to lose track of pensions, especially if they come between jobs. Keeping a record of what you’ve built up – and knowing where your pensions are – can save a lot of hassle later. We've got a guide on How to find lost pensions if you do get stuck.

What happens to my pension if my employer goes bust?

If your employer has gone out of business and you've lost your job, you might be concerned about what happens to your pension. In most cases your pension will be protected, though exactly what happens will depend on the type of pension you have:

Money Purchase (defined-contribution) pensions

In a Money Purchase scheme, the money you add (as well as any your employer adds) is invested through a pension firm and builds up a 'pot' of money. Your pension pot's size will depend on how much you put in, as well as investment growth.

This sort of pension by its nature is separate from your employer's finances – the money is held by a pension provider and not the company. As such, if the employer were to go bust, your pension pot is safe and still yours – you won't lose what you've already built up.

However, your employer contributions will stop so you may need to decide what to do with the pension. You could leave it where it is and continue to contribute, transfer it to a different pension (which perhaps has better fees), or start a new pension altogether. If you do this, you may decide to consolidate your existing pension into your new one.

Salary Scheme (defined-benefit) pensions

These are now less common for those saving into pensions nowadays. Some older workers might have them from a few years back – or you might still have one if you work in a specific sector. Here you get a set percentage of your 'final' or 'average' salary each year (eg 1/60th, so work at a company for 20 years and get 1/3 of your final salary when you retire).

You'll know you've got one of these if, when you check your statement, it shows your current salary, how long you've been with the firm, and your predicted final annual income (as opposed to a total amount invested).

If your employer goes bust, the pension scheme doesn't automatically disappear. If the scheme has enough money, members may still receive their promised benefits. If it can't meet its obligations, it will usually enter the Pension Protection Fund (PPF), which provides compensation to members.

What you might get:

• 100% of your pension if you’ve already reached scheme retirement age

• 90% of your pension if you haven’t.

What happens to my pension if I inherit a pension?

Inheriting a pension doesn’t change your own personal existing pension. Your own pension pot stays exactly the same, your contribution limits and tax relief rules don’t change and it importantly doesn’t count towards your annual allowance (100% of earnings, to a maximum of £60,000 in 2026/27).

It of course might change how you plan for retirement overall, and importantly, how old the person was when they died will affect whether you have to pay income tax:

Generally speaking:

• You WON'T pay income tax if the pension owner died before reaching 75.

• You WILL pay income tax if the pension owner died after reaching 75.

This rule of thumb applies to Money Purchase pensions, most drawdown funds and annuities that continue to pay out after the pension owner has died – though be mindful there are some scenarios where income tax might be due even if the original pension holder died before reaching 75.

Salary Scheme pensions are more complicated. If it continues to pay an income to a dependant after the owner's death, income tax will be due regardless of how old the owner was when they died. But if the pension scheme pays out a lump sum instead, the 75 rule is likely to apply.

For more information, see our guide on Inheriting a pension: what happens and is there tax to pay?.

What happens to my pension if i die before accessing it?

If you die before taking any money from your pension, it will usually still be passed on – and although pensions will be subject to Inheritance Tax from April 2027, this still won't affect the majority of estates.

In most cases, your pension won’t form part of your will. Instead, your provider will look at your ‘expression of wishes’ or 'nomination' form, where you’ve indicated who you’d like to receive the money.

While the provider has discretion over who ultimately gets it, they will usually follow your wishes. That’s why it’s important to keep your nomination up to date, particularly after major life events such as marriage, divorce or having children.

If you have a Money Purchase (defined-contribution) pension – the most common type, including workplace and personal pensions – your beneficiaries will usually be able to choose how they take the money. They might take it as a lump sum, leave it invested and draw from it over time, or use it to provide an income. This flexibility can allow the pension to continue growing and even be passed on again in the future.

The tax treatment depends largely on your age when you die.

If you die before age 75: the pension can usually be passed on free of income tax, whether it’s taken as a lump sum or drawn gradually

If you die at 75 or over: the person inheriting the pension will usually pay income tax on what they take, at their own marginal rate. This distinction is a key part of how pensions are treated in estate planning.

It works differently if you have a Salary Scheme (defined-benefit) pension. These schemes typically pay a survivor’s pension to a spouse, civil partner or sometimes another dependant, usually based on a proportion of the pension you would have received. Some schemes may also provide a lump sum if you die before retirement, though the exact rules vary.

One of the simplest but most important things you can do is ensure you’ve named a beneficiary. If there’s no nomination form, the provider will decide who receives the pension, which can delay payments and may not reflect your intentions.

See our guide to Who will get my pension savings if I die before I retire? for more information.