Stakeholder Pension - what happens if I die

ericpode

I'm trying to understand my pension provisions, and what happens if I die unexpectedly before I retire.

I have a Virgin index tracker stakeholder pension. I haven't paid into it for many years, so it has just been building up over the years.

What happens to the total value of it if I die? If it was an ordinary savings account then my partner could inherit it (presumably they would have to pay inheritance tax on that?), but I'm not sure what would happen to my pension pot. Can my partner just inherit it as a full cash payment (seems unlikely), or can it be transferred so that it becomes their own pension pot?

xylophone

http://uk.virginmoney.com/virgin/pension/personal/faq.jsp

"When you took out your Virgin Pension, you may have named one or more beneficiaries. Beneficiaries are people you nominate to receive your pension savings when you die.

If you die before you are 75

If you die before the age of 75, your beneficiaries will pay no income tax on the amounts they inherit. They will then either choose to receive a lump sum, or will be able to draw down income from the pension savings.

If you die after you are 75

At the moment, any pension savings not already withdrawn are subject to a 55% tax charge payable by your estate, your executors or a personal representative. From 6 April 2015, this tax charge will be lowered and beneficiaries will have the following options:

Take the whole fund as cash in one go

With this option, the whole pension fund is subject to 45% tax (although the Government has proposed that from 2016/17, it should be taxed at the beneficiaries’ marginal rate of tax).

Access the fund flexibly

Your beneficiaries will be able to access the pension funds flexibly at any age, and pay tax at their marginal rate."

dunstonh

question answered. However, you may want to review the Virgin stakeholder pension as its bad value for money and has a poor investment selection.

ericpode

Thank you that is a great help.

you may want to review the Virgin stakeholder pension as its bad value for money and has a poor investment selection.

Really? I guess that's my fault for taking my eye off it for so many years.

Is there an article about the best stakeholder pensions currently available, or maybe a comparison site to compare performance and fees?

dunstonh

ericpode wrote: »

Thank you that is a great help.

Really? I guess that's my fault for taking my eye off it for so many years.

Is there an article about the best stakeholder pensions currently available, or maybe a comparison site to compare performance and fees?

Stakeholder pensions were a 2001 product that was brought into bring product charges down. The rules were no more than 1.5% p.a. for first 10 years and 1% thereafter. Nowadays many stakeholders still follow those charges but some are cheaper.

However, personal pensions available today can be got around 0.4% p.a. (some cheaper, some more expensive - often depends on value. If over £20k, then 0.4% should be your benchmark)

zagfles

See http://www.moneysavingexpert.com/savings/discount-pensions