Pension Inheritance for Expats in Europe: What Happens to Your Pension When You Die?
Most British, German, Dutch, and French expats living in Spain have at least one pension pot back home. Many have two or three — a workplace scheme, a private personal pension, and some entitlement to a state pension. Almost none of them have made a clear plan for what happens to those pensions when they die.
This is one of the most expensive gaps in expat estate planning, and it is almost entirely invisible until it is too late.
Pensions do not automatically go where you think they will. They do not follow Spanish inheritance law. They are often not covered by your will. And the rules differ significantly depending on the country where your pension is held, the type of pension you have, and who you have — or have not — told the pension provider to pay.
This guide explains, clearly and practically, what happens to UK, German, Dutch, and French pensions when an expat in Spain dies. It covers state pensions, private pensions, and occupational schemes, and explains the Spanish tax treatment your heirs will face. It ends with the practical steps you should take now.
Why Pensions Are Legally Different from Other Assets
When you die, your estate — your property, bank accounts, investments, personal possessions — passes according to either your will or the rules of intestacy. In cross-border situations within Europe, EU Regulation 650/2012 determines which country's succession law applies (usually the country where you habitually reside at the time of death — most likely Spain).
Pensions are different. In most jurisdictions, pension funds are held in trust or under a separate legal wrapper that sits outside the deceased's estate. They do not pass through probate. They are not governed by succession law. They are paid directly by the pension provider — but only to whoever that provider has been instructed to pay.
That instruction is called a nomination of beneficiaries (or expression of wishes). It is a form you complete with your pension provider. It is separate from your will. And in many cases, it overrides your will entirely.
This distinction matters enormously for expats. Your Spanish notarial will, however carefully drafted, may have no effect whatsoever on a UK defined contribution pension, a German betriebliche Altersversorgung, or a Dutch occupational pension. If your nomination of beneficiaries form is outdated — naming an ex-partner, a deceased parent, or simply left blank — the pension provider will pay the proceeds as they see fit, or they will follow their scheme rules, which may not reflect your wishes.
UK Pensions for British Expats in Spain
Defined Contribution (DC) Pensions
Defined contribution pensions — including SIPPs (Self-Invested Personal Pensions), stakeholder pensions, and most modern workplace pensions — are the most flexible in terms of inheritance.
On death before age 75, the full pension pot can typically be passed to any nominated beneficiary free of UK income tax. On death after age 75, the beneficiary pays income tax at their marginal rate on any withdrawals. This rule applies regardless of where the beneficiary lives — including Spain — though your Spanish heirs will also face Spanish tax on the income they receive (see below).
The Finance Act 2024 introduced a significant change: from April 2027, unused defined contribution pension pots will be brought within the scope of UK Inheritance Tax (IHT). Previously, pension funds sat outside the taxable estate for IHT purposes, making them an efficient tool for passing wealth. That exemption is being removed. The combined effect of IHT at 40% and income tax on withdrawals could create very high effective tax rates for large pension pots. British expats in Spain with substantial DC pensions should review their position with a cross-border financial adviser before 2027.
Defined Benefit (DB) Pensions
Defined benefit pensions — often called final salary schemes — pay a guaranteed income for life. On death, most DB schemes offer a reduced spouse's or dependant's pension (typically 50% of the member's pension). They do not pay a lump sum in the same way as DC pensions. If there is no surviving spouse or qualifying dependant, benefits may cease entirely or a small lump sum may be paid.
The rules vary by scheme. British expats with DB pensions should obtain their scheme's death benefit rules in writing.
UK State Pension
The UK State Pension does not pass to heirs as an asset. However, a surviving spouse or civil partner may be entitled to inherit some or all of their deceased partner's State Pension entitlement, depending on when both parties reached state pension age. Cohabiting partners who were not married or in a civil partnership typically receive nothing.
German Pensions for German Expats in Spain
Germany has a layered pension system with distinct rules for each pillar.
State Pension (Gesetzliche Rentenversicherung)
The German statutory pension (GRV) does not generally pass to heirs as a lump sum. Survivors — spouses, registered partners, and in some cases dependent children — may claim a survivor's pension (Hinterbliebenenrente) from the Deutsche Rentenversicherung. The rate depends on the deceased's pension entitlement and the survivor's own income. Unmarried partners, even long-term ones, have no entitlement.
Riester-Rente
The Riester pension, a state-subsidised private pension, has specific death benefit rules. If the account holder dies before retirement, the accumulated capital (including state subsidies) can be transferred to the surviving spouse's Riester contract without tax consequences. If transferred to other heirs, the subsidies must be repaid and the remaining capital is subject to taxation.
Betriebliche Altersversorgung (bAV)
Company pensions under the German Betriebsrentengesetz (BetrAVG) typically provide survivor benefits for spouses and registered partners. The entitlements vary by the type of arrangement (Direktzusage, Unterstützungskasse, Direktversicherung, Pensionskasse, Pensionsfonds). German expats should request written confirmation from their employer or pension provider of what survivor benefits apply, and ensure that any life insurance wrapper within the scheme has an up-to-date beneficiary designation.
Dutch Pensions for Dutch Expats in Spain
AOW (Algemene Ouderdomswet — State Pension)
The Dutch state pension (AOW) stops on the death of the recipient. There is no survivor benefit to a spouse or partner under the AOW itself. A separate survivor benefit, the Anw (Algemene nabestaandenwet), may apply in limited circumstances — primarily for partners who are caring for children under 18 or who are partially incapacitated. Coverage is considerably narrower than many Dutch expats assume.
Occupational Pensions (Pensioen)
Dutch occupational pensions are governed by the Pensioenwet and administered by large sector-wide funds (such as ABP for government employees or PFZW for healthcare workers) or company pension funds. Most schemes include a partner's pension (partnerpensioen), payable on death to a surviving registered spouse or partner.
The crucial point: the definition of "partner" under Dutch pension rules is scheme-specific. Some schemes require the relationship to be formally registered. Others include cohabiting partners but require prior registration with the fund. Dutch expats in Spain should verify with their pension fund whether their current partner is registered, especially if they have moved abroad, remarried, or entered a new relationship.
French Pensions for French Expats in Spain
Retraite de Base (CNAV) and Complementary Pensions (AGIRC-ARRCO)
French state pension income stops at death. However, French law provides a survivor's pension (pension de réversion) for surviving spouses and divorced spouses (under certain conditions). The rate is generally 54% of the deceased's pension under the base scheme, and 60% under AGIRC-ARRCO. Unmarried partners (en concubinage) do not qualify; PACS partners do not qualify for the base pension de réversion but may qualify under some complementary schemes.
Assurance-Vie as Retirement Savings
Many French residents hold an assurance-vie (life insurance/investment contract) that doubles as retirement savings. These contracts have their own beneficiary clause (clause bénéficiaire) that operates entirely outside the estate and succession law — very similar to the pension nomination forms discussed above. The beneficiary clause must be kept current. Under French law, an assurance-vie paid to a named beneficiary benefits from significant tax advantages, but only if the beneficiary clause is properly drafted and up to date.
French expats in Spain should verify whether their assurance-vie was contracted in France and what the tax treatment will be in Spain when proceeds are paid to a Spanish-resident beneficiary.
Spanish Tax Treatment of Foreign Pension Inheritance
When a Spanish resident receives pension-related death benefits from a foreign pension, the Spanish tax treatment depends on the nature of the payment.
Lump-sum death benefits paid from a foreign pension fund to a Spanish-resident heir are generally subject to Spanish Impuesto sobre Sucesiones y Donaciones (inheritance tax, ISD). The applicable rate depends on the autonomous community of residence — Andalusia, Valencia, and Madrid have substantially reduced effective rates, while others are higher. The foreign country may also withhold tax, and double tax treaties (particularly the Spain-UK Double Tax Convention) will determine how relief is applied to avoid double taxation.
Ongoing survivor pensions (periodic income paid to a surviving spouse) are generally treated as income in Spain and taxed under the IRPF (income tax) rules, not inheritance tax. The income must be declared annually.
UK DC pension withdrawals made by a Spanish-resident beneficiary are treated as income under Spanish tax law and must be declared via the IRPF. The UK-Spain Double Tax Convention generally gives Spain the primary right to tax pension income received by Spanish residents, though certain government service pensions remain taxable only in the UK.
Given the complexity — home country withholding, double tax treaties, Spanish inheritance tax, and Spanish income tax all potentially applying to the same asset — obtaining specialist advice from a cross-border tax adviser is essential. For context on the broader succession framework, see our guide to estate planning for expats in Spain.
The Nomination of Beneficiaries Form: Why It Overrides Your Will
This point cannot be overstated. For defined contribution pensions, SIPPs, and many occupational schemes, the pension provider does not look at your will. They look at the nomination of beneficiaries form on their records.
If you completed that form fifteen years ago, naming your first spouse or your parents, and have since divorced, remarried, and had children — the old nomination may still stand. Your will cannot override it.
In the UK, most pension trustees treat nominations as an expression of wishes rather than a binding instruction (because binding instructions would bring the pension into the estate for IHT purposes). This means trustees have discretion, but in practice they usually follow the nomination.
In Germany and the Netherlands, beneficiary designations in pension and life insurance contracts are generally binding and cannot be overridden by a will.
Action required: Contact every pension provider and request a copy of the nomination of beneficiaries currently on file. Review it. Update it if necessary. Do this every time your personal circumstances change.
For British expats in Spain, this sits within the broader framework of estate planning for British expats in Spain.
Practical Steps: What to Do With Each Pension You Hold
The following is a checklist for expats with pensions in multiple countries.
Step 1 — Inventory every pension List every pension you hold: state pensions (UK NI number, German DRV number, Dutch BSN, French numéro de sécurité sociale), every workplace scheme, every private pension. Include the provider name, policy or scheme number, approximate value (or type of benefit), and the country where it is held.
Step 2 — Request death benefit rules in writing Contact each provider and ask specifically: what happens to my pension on death? Who can receive it? Is it a lump sum, a dependant's pension, or both? Is it inside or outside my estate?
Step 3 — Review and update every nomination of beneficiaries Obtain the current nomination on file. Update it if circumstances have changed. Ensure your Spanish partner or spouse is named where relevant, and that the provider has your current address and contact details.
Step 4 — Assess the Spanish tax position for your heirs Understand whether your heirs will face Spanish inheritance tax, Spanish income tax, or both — and whether a double tax treaty provides relief. Consider the autonomous community where your heirs reside, as regional tax rules vary significantly.
Step 5 — Coordinate with your will and overall estate plan While your pension may not be covered by your will, your will and your pension nominations should form a coherent overall plan. Discuss both with a cross-border estate planner.
Step 6 — Document everything and make it accessible Your family needs to know that these pensions exist, where they are held, and what to do. A pension that exists but cannot be found — because the policy documents are in a filing cabinet in another country — causes months of delay and distress at an already difficult time.
Frequently Asked Questions
Does my Spanish will cover my UK pension? In most cases, no. UK defined contribution pensions are held in trust outside your estate and pass according to the nomination of beneficiaries form, not your will. UK defined benefit pensions follow scheme rules. Your Spanish will does not govern these assets.
What happens to my UK pension if I die without a nominated beneficiary? The pension trustees will exercise their discretion under the scheme rules. They will typically consider your estate, your immediate family, and any individuals financially dependent on you. The process can be slow and the outcome uncertain. Always complete a nomination of beneficiaries form.
Will my Spanish heirs pay double tax — both UK and Spanish? Not necessarily. The UK-Spain Double Tax Convention addresses this. The general principle is that Spain has primary taxing rights over pension income received by Spanish residents. However, the detail depends on the type of pension and the type of payment. A specialist adviser can model the likely outcome for your specific situation.
I have been contributing to the Spanish pension system (Seguridad Social). Does that change anything? If you have made contributions to the Spanish system during employment in Spain, you may have some entitlement to a Spanish state pension, and your surviving spouse may have an entitlement to a Spanish survivor's pension (pensión de viudedad). This is entirely separate from your foreign pensions and is governed by Spanish Social Security rules.
My partner and I are not married. Are they entitled to any of my pension? It depends on the pension and the country. UK DC pensions can be nominated to anyone. UK DB schemes, German bAV, and Dutch occupational pensions often restrict survivor benefits to legal spouses or registered partners. French pension de réversion is only available to married or divorced spouses. If you are in a long-term relationship without a legal marriage or civil partnership, review each pension's rules carefully and ensure your partner is explicitly nominated wherever possible.
Conclusion
Pension inheritance is the most structurally misunderstood part of expat estate planning. Unlike property or bank accounts, pensions sit outside succession law, are governed by home-country rules, and are paid — or not paid — on the basis of a form that most people complete once and never revisit.
For expats in Spain with pension entitlements in the UK, Germany, the Netherlands, France, or elsewhere, the stakes are high. The interaction between home-country pension rules, double tax treaties, and Spanish inheritance and income tax creates genuine complexity. And because pension nominations override wills, the consequences of inaction can be irreversible.
The starting point is simple: know what pensions you have, know who they are currently nominated to, and make sure your family knows that these assets exist.
Sucesio helps expats document every asset — including pension details and beneficiary nominations — so their family knows exactly what exists and where to find it. See how it works →
Published: 2026. References: Finance Act 2024 (UK pension IHT changes) · Regulation (EU) No 650/2012 · Real Decreto Legislativo 5/2004 IRNR · German Betriebsrentengesetz (BetrAVG) · Dutch Pensioenwet · Spain-UK Double Tax Convention · Ley General de la Seguridad Social (LGSS). This article is for informational purposes only. Consult qualified pension and tax advisors in both your home country and Spain.