- If you die before the age of 75 your beneficiaries will inherit your fund completely tax-free.
- If you die after the age of 75 the recipient will pay income tax on any withdrawals they make. Also, until April 2016, a 45% tax charge will apply if they remove the entire fund.
How can you ensure that your children will receive your pension?
- Give contact details of your beneficiaries to your provider; your pension does not form part of your will so it is essential that you remember to do this
- Be sure that the way in which you take your pension allows you to pass it on to your loved ones. In broad terms the new rules apply for those who have kept their money invested or are in income drawdown. With an annuity, you can nominate a beneficiary and pass on the income as long as it is on a joint life basis or if it has a guarantee period.
- Check how well your fund is performing to see whether you’ll have enough left over to pass on. Also take into account how much you are likely to need to live on when you retire, bearing in mind that we are all likely to be living longer in the future, which, in turn, will put more pressure on your pension pot.
The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.