Expression of wishes & investment/pay-out of existing funds

RoughRook

Looking for information on what happens to the underlying investments held within my SIPP should I indicate within my 'expression of wishes' form that I would like the proceeds to be paid out to my beneficiaries as 'pension income' instead of a 'lump sum'.
Does the trustee (the SIPP provider) decide for themselves the best method for paying out the pension as income, or can they be instructed by myself in advance how the proceeds should be invested and paid out?
Ideally I'd like all of my existing investments to be sold and consolidated into low cost index funds upon death, and then a specified percentage of the pension value to be paid out (drawn down) to my beneficiaries on an annual basis. If that is not possible then can my beneficiaries be given  full control of the SIPP proceeds and invest as they wish and also drawing down as they wish?
Not planning to die just yet but would like some control over the strategy of pension income to my wife and children should I get hit by a bus anytime soon.
Would really appreciate it if anyone is able to shed some light on this.

Marcon

RoughRook said:

Looking for information on what happens to the underlying investments held within my SIPP should I indicate within my 'expression of wishes' form that I would like the proceeds to be paid out to my beneficiaries as 'pension income' instead of a 'lump sum'.
Does the trustee (the SIPP provider) decide for themselves the best method for paying out the pension as income, or can they be instructed by myself in advance how the proceeds should be invested and paid out?
Ideally I'd like all of my existing investments to be sold and consolidated into low cost index funds upon death, and then a specified percentage of the pension value to be paid out (drawn down) to my beneficiaries on an annual basis. 

Have you read the information on your SIPP provider's website about what happens to your SIPP when you die? Do they actually give you the option to specify that you can insist on beneficiaries receiving income rather than a %age of the value of the SIPP? 

RoughRook said:

 If that is not possible then can my beneficiaries be given  full control of the SIPP proceeds and invest as they wish and also drawing down as they wish?
Not planning to die just yet but would like some control over the strategy of pension income to my wife and children should I get hit by a bus anytime soon.
Would really appreciate it if anyone is able to shed some light on this.

Normally it's for the beneficiary/ies to decide which route to go. You can't influence their choices from beyond the grave!

Hopefully it will be good long time before any of this becomes necessary.

p00hsticks

I can only comment on a particular case that I've had to deal with recently, but there only certain beneficiaries were allowed the option of taking an annual income, according to the rules of the scheme.

An 'expression of wish' is just that - trustees are not obligated to follow the wishes expressed (although usually would do so) - it;s the price you pay for the pension pot falling outside the estate.

RoughRook

Marcon said:

Have you read the information on your SIPP provider's website about what happens to your SIPP when you die? Do they actually give you the option to specify that you can insist on beneficiaries receiving income rather than a %age of the value of the SIPP? 

Thanks for the reply. The SIPP provider is Interactive Investor. They give option for either 'lump sum' or 'pension income', but also provide an option to make my own comments before submitting the expression of wishes form.

I have a feeling that my best option will be to go for the pension income option and simply explain to family in advance what I believe the best strategy for investing for income would be. They can then keep the tax-free wrapper. Like you say, I can't influence them should I ever get hit by that bus.

RoughRook

p00hsticks said:

I can only comment on a particular case that I've had to deal with recently, but there only certain beneficiaries were allowed the option of taking an annual income, according to the rules of the scheme.

An 'expression of wish' is just that - trustees are not obligated to follow the wishes expressed (although usually would do so) - it;s the price you pay for the pension pot falling outside the estate.

Thanks for your comment

dunstonh

Thanks for the reply. The SIPP provider is Interactive Investor. They give option for either 'lump sum' or 'pension income', but also provide an option to make my own comments before submitting the expression of wishes form.

The comments will be to cover off things like if a beneficiary dies, how would you like it altered.

It won't be to force the beneficiaries into an investment style or limit the beneficiary drawdown to suit your wishes.

Be wary you are reading the form correctly.   The forced lump sum option may be taxable as it removes trustee discretion.  

I have a feeling that my best option will be to go for the pension income option and simply explain to family in advance what I believe the best strategy for investing for income would be. 

Although they won't have to follow any of that.

Albermarle

Ideally I'd like all of my existing investments to be sold and consolidated into low cost index funds upon death

I very much doubt that the Trustees would take any investment instructions upon your death . The pension will presumably remain invested in the way it was before you died . Then when the pension is transferred to the beneficiary(s) they can leave it or change it .

Of course you could leave some informal advice to the beneficiaries what to do, and they might appreciate that , especially if their investing knowledge was low. 

RoughRook

dunstonh said:

The comments will be to cover off things like if a beneficiary dies, how would you like it altered.

Thanks for clarifying that point.

RoughRook

Albermarle said:

I very much doubt that the Trustees would take any investment instructions upon your death . The pension will presumably remain invested in the way it was before you died . Then when the pension is transferred to the beneficiary(s) they can leave it or change it .

Having now read yours and others' responses I now have a much better grasp of what the 'expression of wishes' form actually is. Never really considered it before, but hitting 50s gives one a different perspective. Thanks for your insights.