Unclaimed pension inheritance

gavcradd

My mother is in her late 60s and is lucky enough to be well off enough to do everything she needs from her workplace and state pension. She also has another defined contribution pension that she paid into for many years which she hasn't yet claimed; her logic is that she doesn't need the money and so she'll leave it there growing until/if she ever does, or for her kids to inherit.
I'm sure I read that inheritance of an unclaimed pension pot if the person dies after the age if 75 is heavily taxed (at the inheritee's marginal income tax rate? In my case 40%). However, I can't easily find this information now.
Is that right? If so, should I be advising my mother to claim it and transfer it to some other product? 

gavcradd

I should add, she's currently as fit as an ox and not going anywhere soon (fingers crossed)!

TadleyBaggie

DC pensions may be lost on death, don't assume it can be passed on. If the pension is transferred into a SIPP without doing a drawdown maybe a better plan. What exactly is the existing DC pension?

gavcradd

TadleyBaggie 
 What exactly is the existing DC pension?

Thanks - I don't know but will speak to her to check. So a SIPP can be passed on even if unclaimed?

dunstonh

So a SIPP can be passed on even if unclaimed?

As can most money purchase pensions. (those with investment funds)

I'm sure I read that inheritance of an unclaimed pension pot if the person dies after the age if 75 is heavily taxed (at the inheritee's marginal income tax rate? In my case 40%). However, I can't easily find this information now.

Only if you draw it from the pension in the year you are paying 40%. If you leave it in the pension in your name, then there is no tax to pay until you do start drawing it (and only on that particular amount or what it grows to).

xylophone

https://www.gov.uk/tax-on-pension-death-benefits

TVAS

She needs to complete an expression of wish form to nominate her beneficiaries i.e. her children. However the trustees of the personal pension, a drawdown a SIPP are personal pensions will also take note of her will. When the personal pension is set up assuming she is not in one now she needs to ask the provider for said form, complete and return and she should keep a copy for herself stored with her will. I know this is the bleeding obvious but so many people do not retain a copy nor store it with a will.