Inherited Pension Pot

marginalone

My sister and I have inherited a pension pot of £450k.   Our late mother's Wealth Manager is offering to look after the money and we take out an flexi drawdown product.  My share of the pension pot would be useful as I can pay off my mortgage and other debts. Am I right in assuming as my mother died before 75 and never drew this pension pot I can take my share as a tax free lump sum?

EDIT:  Our Mother left over £1million.

Dox

Yes, but whether it would be a good idea to do so depends on how pressing the debts are. Paying off your mortgage always has a feel good factor which outweighs plenty of other considerations, but if you don't need all the money at once, think before you move it from somewhere where returns will continue to grow in a tax-favoured environment.

If the wealth manager isn't an independent financial adviser, think about getting some advice from someone who is. 

Albermarle

It depends if you have suitable arrangements in place for your retirement income when reach that point .
If not then would be better to keep as much as possible in the pension for your later benefit .
Maybe take part as a lump sum to pay off any high interest debts and/or spend some in a way your Mother would have liked . 

marginalone

I spoke with the Wealth Manager and he claims that there would be a tax due if I take a lump sum.  Confused!

Paul_Herring

I suggest you find an Independent Financial Advisor to replace your Wealth Manager.

Dox

marginalone said:

I spoke with the Wealth Manager and he claims that there would be a " theoretical tax due" if I take a lump sum.  Confused!

Sounds like complete garbage. Did you ask him to explain? Could he do so? If not, then find someone else to advise you.

marginalone

Dox said:

marginalone said:

I spoke with the Wealth Manager and he claims that there would be a " theoretical tax due" if I take a lump sum.  Confused!

Sounds like complete garbage. Did you ask him to explain? Could he do so? If not, then find someone else to advise you.

I have another call arranged. There is some info about an LTA tax charge to be paid when money is distributed and liability is onto my sister and I?  

I will be talking to an IFA about it too.

Dox

It's either a tax or it isn't - even HMRC hasn't yet invented theoretical taxes!

Hal17

Perhaps the following link might be helpful.
tax-on-pension-death-benefits

marginalone

Hal17 said:

Perhaps the following link might be helpful.
tax-on-pension-death-benefits

" You may also have to pay tax if the pension pot’s owner was under 75 when they died and any of the following apply:

• you’re paid more than 2 years after the pension provider is told of the death
• they had pension savings worth more than £1,073,100 (the ‘lifetime allowance’)

"
My Mother had a few quid more than this.  So taxable then?

dunstonh

Some wealth managers are not actually advisers.  They just control the investment fund.     The quality of knowledge they may have can be very limited and sometimes on par with "man down the pub" level.   Their focus may well be retention of the money with them rather than what is best for the beneficiaries.