Inherited Pension

fullofcold

I can't seem to find the answer to this question anywhere so hopefully someone here can.  If I inherit my parents pensions (they are not drawing them - appreciate they might need them in a while for care) what age can I start to draw them from?  Do I have to wait until my state retirement, or can I take them younger?  Ideally I'm aiming to retire at 64 (which also might be a stretch, but I am hammering money into repaying the mortgage early and my pension at the same time).

eskbanker

Assuming of course that the pensions are in a form that allows them to be bequeathed, there'd be no need for you to wait until state pension age, it's the earlier private pension availability age (currently 55) that is the key milestone - there's more info in response to a related question at https://forums.moneysavingexpert.com/discussion/6100598/does-an-inherited-sipp-count-as-wealth-for-a-support-group-esa-claimant

fullofcold

eskbanker said:

Assuming of course that the pensions are in a form that allows them to be bequeathed, there'd be no need for you to wait until state pension age, it's the earlier private pension availability age (currently 55) that is the key milestone - there's more info in response to a related question at https://forums.moneysavingexpert.com/discussion/6100598/does-an-inherited-sipp-count-as-wealth-for-a-support-group-esa-claimant

Thank you - definitely in the right format to allow them to be bequeathed as their financial advisor has seen to it.

jamesd

fullofcold said:

If I inherit my parents pensions (they are not drawing them - appreciate they might need them in a while for care) what age can I start to draw them from?

The date of your birth at least. Not sure about earlier than that.

Leaving pensions to grandchildren can be a useful tax reduction tool if the giftor is 75 or older when they die. Before that age money  can be taken out tax free. After, it's added to the recipient's income as it's withdrawn. Babies and children get their own income tax personal allowance so can get £12,500 a year out tax free anyway. Their trustee can use this for the child's benefit including for food, clothing, housing and education.

I don't think that babies and children can be relevant  benefit claimants so there's potential legal tax avoidance scope there.

jamesd

eskbanker said:

Assuming of course that the pensions are in a form that allows them to be bequeathed, there'd be no need for you to wait until state pension age, it's the earlier private pension availability age (currently 55) that is the key milestone

Wrong. An inherited pension can be taken at any age and 55 is irrelevant to this.

fullofcold

jamesd said:

eskbanker said:

Assuming of course that the pensions are in a form that allows them to be bequeathed, there'd be no need for you to wait until state pension age, it's the earlier private pension availability age (currently 55) that is the key milestone

Wrong. An inherited pension can be taken at any age and 55 is irrelevant to this.

Ah, so (and I sincerely hope this does not happen) if my parents died tomorrow at 42 I could claim the pension if I wanted to?

crv1963

fullofcold said:

jamesd said:

eskbanker said:

Assuming of course that the pensions are in a form that allows them to be bequeathed, there'd be no need for you to wait until state pension age, it's the earlier private pension availability age (currently 55) that is the key milestone

Wrong. An inherited pension can be taken at any age and 55 is irrelevant to this.

Ah, so (and I sincerely hope this does not happen) if my parents died tomorrow at 42 I could claim the pension if I wanted to?

Yes, and as they are under 75 you would get it tax free.

jamesd

Ah, so (and I sincerely hope this does not happen) if my parents died tomorrow at 42 I could claim the pension if I wanted to?

Yes, whatever they left to you, And for the one(s) under 75 at death it's all tax free - and not counted for recycling - as well.

You can even leave it to your children and they inherit the tax term you got as  a "successor pension".