What Happens to Your Pension When You Die in Ireland — Death Benefits Explained

Most people spend a lot of time thinking about how their pension will support them in retirement, and very little time thinking about what happens to it if they die first — or shortly after they retire. The rules are different depending on the type of pension, when you die, and who you leave behind. Getting this wrong can mean your family inherits a much larger tax bill than necessary.

This article walks through every main scenario clearly and practically.

The Two Big Questions

Before the specifics, the two questions that determine almost everything are:

1. Did you die before or after you retired and started drawing down?
2. What type of pension did you have — occupational scheme, PRSA, ARF, or annuity?

The answers put you in completely different tax and inheritance scenarios.

Dying Before Retirement — Pre-Retirement Death Benefits

Defined Contribution Pension (DC Scheme) or PRSA

If you die before you retire and you have a defined contribution occupational pension or a PRSA, the accumulated fund value is paid out as a lump sum. The trustees of the scheme — or the PRSA provider — typically pay this to your estate or to named nominees, subject to their discretion.

The tax treatment is:

• First €200,000: Exempt from tax. This is the death benefit exemption under Irish tax law.
• The next €575,000 (up to €775,000 total): Taxed at 20%.
• Anything above €775,000: Taxed at the marginal income tax rate (currently 40% for higher-rate amounts).

The lump sum, once paid out, also becomes part of the estate and may be subject to Capital Acquisitions Tax (inheritance tax) in the hands of the beneficiary — depending on their relationship to the deceased and their CAT threshold. Beneficiaries who are children, for example, have a Group A CAT threshold of €400,000 (2026 figure) before CAT at 33% applies.

Occupational Pension Death-in-Service Benefit

Many occupational pension schemes include a separate death-in-service benefit — a lump sum payable if you die while employed. This is typically four times your annual salary, though it varies by scheme. Some employers provide this through the pension scheme itself; others through a separate group life assurance policy.

The tax treatment follows the same structure as above: first €200,000 tax-free, next tranche at 20%, balance at marginal rate. The four-times salary amount for many employees will fall within or close to the tax-free threshold.

Life Assurance Written in Trust

If your employer has set up the life assurance policy using a trust structure (which is good practice), the benefit is paid directly to the trust beneficiaries and bypasses your estate entirely. This means:

• It is not subject to probate delays
• It avoids the executor's scope of authority
• In some cases, it can be structured to reduce the interaction with CAT thresholds

Not all group life policies are written in trust — it is worth checking with your employer's HR or benefits team what the structure is.

Dying After Retirement — The ARF Rules

If you retired and moved your pension into an Approved Retirement Fund (ARF), the ARF is an asset in your estate at death — but it is treated differently from ordinary assets because it contains untaxed money (the fund grew tax-free, and income tax is due on drawdowns).

ARF Passing to a Surviving Spouse or Civil Partner

This is the most favourable outcome. When an ARF owner dies and leaves the ARF to their spouse or civil partner, the surviving spouse can transfer the ARF into their own ARF — tax-free, with no income tax on the transfer. The fund simply continues under the spouse's name, subject to the imputed distribution rules (the requirement to draw down a minimum each year, typically 4–5% depending on age).

This is one of the significant advantages of an ARF over an annuity — the fund can pass intact to a surviving spouse and continue growing tax-free within the ARF wrapper.

ARF Passing to a Child Under 21

If the ARF passes to a child who is under 21 at the date of the ARF owner's death, the transfer is subject to income tax at 30% — not at the marginal rate. The child does not receive an ARF; they receive a lump sum net of this tax. This is a specific Revenue rule designed to prevent ARFs being used as a mechanism to pass untaxed wealth to the next generation cheaply.

ARF Passing to a Child Over 21

If the ARF passes to a child who is 21 or over, the fund value is treated as income of the child and taxed at their marginal income tax rate (potentially 40% plus USC and PRSI, depending on their income in that year). This can result in a significant tax bill for the inheriting child.

ARF Passing to Anyone Else (Non-Dependant Adults)

If the ARF passes to any other person — a sibling, a friend, a non-dependent adult, anyone who is not a spouse, civil partner, or child — the fund is subject to income tax at a flat rate of 30%. This is a deemed encashment: Revenue treats the full ARF value as income of the deceased in the year of death, taxed at 30%, and the balance passes to the beneficiary.

Beneficiary	Tax on ARF at Death
Spouse / Civil partner	No tax — transfers to spouse's ARF tax-free
Child under 21	Income tax at 30% flat rate
Child 21 or over	Income tax at marginal rate (up to 40%+)
Any other person	Income tax at 30% flat rate

Note: after income tax is applied, the amount received by the beneficiary may also be subject to Capital Acquisitions Tax depending on their relationship and remaining CAT thresholds. Whether double taxation applies in practice depends on Revenue's offset rules — get specific advice if your estate is complex.

Dying After Retirement — The Annuity Rules

If you used your pension fund to purchase an annuity (a guaranteed income for life), the inheritance outcome depends entirely on the type of annuity you chose at the point of purchase. This cannot be changed after the annuity is set up.

Single-Life Annuity

A single-life annuity pays an income to you for the rest of your life and then stops completely. Your spouse or family receive nothing. The insurance company keeps any remaining value. For people without dependants, or those who prioritised maximum income, this delivers the highest payment — but leaves nothing to pass on.

Joint-Life Annuity

A joint-life (or last survivor) annuity continues paying after you die — typically at 50% or 100% of the original amount — to your surviving spouse or civil partner for the rest of their life. In return, the initial payment is lower than a single-life annuity. This is the standard choice for people with a dependent spouse.

Guaranteed Period Annuity

A guaranteed period annuity guarantees payments for a minimum term — commonly 5 or 10 years — regardless of whether you are alive. If you die within that term, payments continue to your estate or nominees for the remainder of the guaranteed period. If you die after the guaranteed period, the annuity simply stops as with a single-life annuity.

This is the only form of annuity that can pass value to heirs — but only if death occurs within the guaranteed term.

PRSA Death Benefits

A PRSA that has not yet been drawn down at death follows the same rules as a DC occupational pension: the fund value is paid as a lump sum, first €200,000 tax-free, next tranche at 20%, balance at marginal rate.

If the PRSA has been converted to an ARF-style drawdown (which is possible under PRSA rules), then the ARF death benefit rules above apply instead.

Does a Pension Go Through Probate?

This depends on the scheme type. For occupational pensions (both DC and DB schemes), the trustees hold the assets — not the member personally. Because the pension is legally a trust, the trustees have discretion to pay the death benefit to whomever they choose from among the eligible beneficiaries, which typically means it can be paid without waiting for probate to complete.

This is a significant practical advantage. Probate in Ireland can take many months — sometimes longer for complex estates. A pension death benefit paid via trustee discretion can reach your family much faster, which matters when they need immediate financial support.

For PRSAs, the fund forms part of the estate and does go through probate. This is one of the structural differences between a PRSA and an occupational scheme from an estate planning perspective.

The Nomination of Beneficiaries — Why It Matters

For occupational pensions, you can — and should — complete a nomination of beneficiaries form, indicating who you want to receive the death benefit. The trustees are not legally bound to follow this instruction; they retain discretion. But a completed nomination is a strong signal of your wishes and will almost always be followed in straightforward cases.

If you have no nomination in place, or if your nomination is outdated (for example, it names a former spouse), the trustees will determine who receives the benefit based on their own assessment of the eligible beneficiaries. This can cause delays and, in complex family situations, disputes.

Summary — Quick Reference

Scenario	What Happens	Tax Treatment
DC / PRSA death before retirement	Fund paid as lump sum to estate/nominees	First €200k tax-free; next band 20%; balance at marginal rate
Death-in-service (occupational scheme)	Lump sum (typically 4x salary)	Same as above
ARF to spouse / civil partner	Transfers to spouse's ARF intact	No tax on transfer
ARF to child under 21	Lump sum to child	Income tax at 30%
ARF to child 21 or over	Lump sum to child	Income tax at marginal rate
ARF to other adults	Lump sum to beneficiary	Income tax at 30%
Single-life annuity on death	Payments stop — no inheritance	N/A
Joint-life annuity on death	Reduced income continues to surviving spouse	Ongoing income tax on payments
Guaranteed term annuity (within term)	Payments continue to estate for remainder of guaranteed period	Income tax on payments as received