Spouse inheriting a pension investment

Tax_Slave

Hi - I’m 59 and my wife is 56.
I have some final salary pensions that are paying me at the moment and two pension funds that I built up in previous employment.
These pension funds are invested and I have not taken any money from them.

One is worth £189,000 and the other £90,000 approx.
Due to current issues in the world , one fund is down 15% at the moment and the other about the same.

I have a form of blood cancer that shortens my expected life span. There is a probability of 55% I will be dead within next 5 years and 70% dead within 10 years.

When I die my wife I understand will inherit both pension funds.
On inheritance of the pension funds does my wife have to have them cashed in or can she leave them invested?
aka Wait until they regain loses if this was to happen in next year or so.

Thanks for any answers 

LV_426

Sorry to hear about your condition. I believe your pensions can remain invested, with ownership passing to your wife and she can drawdown on the funds as required.

dunstonh

On inheritance of the pension funds does my wife have to have them cashed in or can she leave them invested?

She gets to choose.  However, not all pension schemes offer all options.  So, you may want to get things in order with one that has all death benefit options.

Beneficiary drawdown means that your pension becomes her pension and is tagged as being beneficiary drawdown. it is never subject to the lifetime allowance again. No matter how many times it is passed on.  And it is not subject to IHT.    If you die before 75, she can draw from that pension totally tax free, whether in one lump or as an income or periodic lump sums.  If you die after 75, it is subject to income tax at her rates.

At age 74, it can be sensible to take the 25% TFC unless your estate (on first or second death) is going to be subject to IHT.
it can also be sensible to keep paying in, even when not working.   Tax relief going in and nothing to pay if you die before 75.   You sound as if you are being practical with your situation.  So, I hope you don't mind me posting in a similar way back.

aka Wait until they regain loses if this was to happen in next year or so.

The majority of negative periods recover within 12 months.   Smaller numbers take 2-3 years. Extreme ones may take a bit longer.   General rule of thumb is not to draw from a pension unless there is justification for doing so.  That will still apply here.

Best wishes...