Islamically, your pension falls within your inheritance to pass on, so the Islamic inheritance shares must be taken into account when being distributed.
It’s good practice to list your pension(s) in your Will as that will let your executors know if they need to inform a pension provider of your passing, if any.
Pension schemes vary so it is best to confirm the terms of yours with your pension provider. How yours will work depends on whether it’s a defined benefit or defined contribution scheme (as well as any specific rules of the scheme). Pensions can be paid out as a lump sum or as an income and may be paid into one’s estate, to your next of kin or to a nominated beneficiary.
Where it is not paid out to your estate, your beneficiary should understand that they will have to distribute it between the Islamic inheritors (unless they consent to waiving their share of it).
Further reading on pensions:
- Definitions of the different pension types
- A breakdown of the tax a pension is subject to
- Overview of halal pensions in the UK
- Why it’s important Muslims have a pension