Random Q of the Day

Lokolo

Ok so if I a £300,000 pension. I turn X and take the 25%, leaving my pension pot £225,000.

Now, what happens when I die?

Say its been 15 years and I still have £110,000 (random number!) left. What happens with that £110,000? Does it go onto family after IHT?

jem16

Depends on what you did when you took your tax-free cash.

Did you buy an annuity?

Did you use income drawdown?

Lokolo

jem16 wrote: »

Depends on what you did when you took your tax-free cash.

Did you buy an annuity?

Did you use income drawdown?

Simple answer I have no idea what they are, I'm 5 years off from even starting a pension lol, damn you and you clever antics.

Hence why it was random Q of the day, trying to learn something everyday to keep my mind occupied!

jem16

OK.

Annuity is where you buy a guaranteed pension for life with your pension pot. It's based on whatever the annuity rates are at the time of taking it. You can have different types of annuity, i.e. level or increasing, one that provides for your spouse in the event of your death.

So if you die and have an annuity with no spouse provision your pension pot dies with you.

If you had spouse provision they would then get a percentage of your pension.

http://www.pensionsadvisoryservice.org.uk/personal_and_stakeholder_pensions/annuities/

Income drawdown is where the funds remain invested and you take an income from them rather like an ordinary investment. Obviously the value can go up or down.

http://www.pensionsadvisoryservice.org.uk/Personal_and_Stakeholder_Pensions/Income_Drawdown/

Lokolo

Ok second one. I don't think I would do the first one.

What happens when theres still investments that exist? Can you just leave them in your will?

jem16

Did you read the Q&A in the link?

Q : What happens if I die before age 75?

A surviving spouse or dependant has three options:

take a lump sum subject to 35 % tax
continue income withdrawal
purchase an annuity
An annuity purchase by the spouse may be deferred until age 60, but no benefits are payable in the meantime.

EdInvestor

Lokolo wrote: »

What happens when theres still investments that exist? Can you just leave them in your will?

Not in your will, they are not part of your estate.Your income drawdown provider will ask you to nominate beneficiaries.They will then (unless you have done something strange such as ignore dependants) pay the money out to the beneficiaries net of 35% tax after your death ( or they can choose the other options mentioned above).This works upo to age 75 after which it gets a lot more complicated and basically the vast majority of the money ends up with the taxman.