Passing down pension

Wellgood

Can you only pass down your pension pot to next of kin if you have not started taking your pension? What about if you have started taking your pension?

kidmugsy

If it is a "pot" yes, whether crystallised or not. Just complete an expression of wishes form for your provider.

If it's a DB pension, no: what happens depends on the scheme rules.

FatherAbraham

Wellgood wrote: »

Can you only pass down your pension pot to next of kin if you have not started taking your pension? What about if you have started taking your pension?

It depends upon what you mean by "taking" your pension.

If "taking" your pension means having bought an annuity with no guaranteed payout period, then the income stream will cease upon your death.

If "taking" your pension means drawing down on the accumulated capital, then it is heritable.

If it's a defined-benefit pension, then there's no pot to worry about, and instead you should consult the scheme rules (sometimes there are continuing bennies for dependents, which is not the same thing as next-of-kin).

Warmest regards,
FA

Wellgood

Thanks kidmugsy and FatherAbraham. OK so if you are taking your pension as flexible drawdown then this "pot" can be passed down.
What about if you take a UFPLS.. ( I understand a UFPLS is where you don't have to buy a pension product with your pot e.g annuity or flexi-drawdown) and you just get the cash. Would this then be able to be passed down or would you have to pay Inheritance tax?

dunstonh

OK so if you are taking your pension as flexible drawdown then this "pot" can be passed down.

Any drawdown (or annuity with value protect) allows the residual fund to be inherited.

drawdown is not a product. Its a method. And there are various methods within that classification.

Caveat: Certain assets held in a drawdown arrangement may have their own death rules as to how they pay out within the pension arrangement. For the purposes of my response, I am referring to conventional investments such as unit linked funds, shares etc.

kidmugsy

Wellgood wrote: »

What about if you take a UFPLS.

Same thing: just complete an Expression of Wishes Form aka a Nomination Form.

The trustees are not obliged to follow your request, but they almost certainly will, unless you've done something odious such as request that all the money go to a Cat's Home when you have some financial dependants who need the money.

That's subject to dunstonh's caveats.