Inherited pension pot - death prior to 75 years old.

Tax_Slave

I thought I understood this and now I read below that adds confusion.
I have blood cancer and there is a high probability almost certain I will die before I’m 75, unless in next few years there is a miracle cure. I’m currently aged 60.
I have a pension pot that I have not touched due to having other income via final salary pensions that’s worth approx £200,000.
My understand is that if I don’t touch this pension pot and die at say 65, my wife will inherit the pot free of tax, let’s say it’s still worth £200,000 then with no growth.

if I take out for example £30,000 within my 25% limit tax free and leave £170,000 on the pot, my wife would inherit say £170,000 with no growth when I die at say 65.

Above was my understanding on how things stand currently.
The pension company will not allow my wife to leave the inherited pension fund invested and cash it out paying her out on my death.

Tonight I read an article in The Daily Mail that implies that that if I have touched the fund ie the taking out £30,000 example then when I die she will not inherit what’s left aka £170,000 with no growth tax free?

see extract from Mail article below. It’s the first paragraph that makes me think she would pay tax if the pension pot has been touched.
Is this correct?

”Under current rules, if you die before age 75 and haven’t yet accessed your pension, your beneficiaries can inherit your defined contribution pension completely tax-free if it is under the lifetime allowance.'

But he says of the new rules under consideration: 'Where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.”

Thanks 
Kevin 

Marcon

Tax_Slave said:

I thought I understood this and now I read below that adds confusion.
I have blood cancer and there is a high probability almost certain I will die before I’m 75, unless in next few years there is a miracle cure. I’m currently aged 60.
I have a pension pot that I have not touched due to having other income via final salary pensions that’s worth approx £200,000.
My understand is that if I don’t touch this pension pot and die at say 65, my wife will inherit the pot free of tax, let’s say it’s still worth £200,000 then with no growth.

if I take out for example £30,000 within my 25% limit tax free and leave £170,000 on the pot, my wife would inherit say £170,000 with no growth when I die at say 65.

Above was my understanding on how things stand currently.
The pension company will not allow my wife to leave the inherited pension fund invested and cash it out paying her out on my death.

Tonight I read an article in The Daily Mail that implies that that if I have touched the fund ie the taking out £30,000 example then when I die she will not inherit what’s left aka £170,000 with no growth tax free?

see extract from Mail article below. It’s the first paragraph that makes me think she would pay tax if the pension pot has been touched.
Is this correct?

”Under current rules, if you die before age 75 and haven’t yet accessed your pension, your beneficiaries can inherit your defined contribution pension completely tax-free if it is under the lifetime allowance.'

But he says of the new rules under consideration: 'Where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.”

Thanks 
Kevin 

These 'new rules' are very much at an early stage of being 'under consideration'; who knows if any such change in the law will ever be made?

More info here on the current situation: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/pensions-after-death

Your final salary pensions, as I'm sure you are aware, will pay out a spouse's pension in line with the rules of the scheme(s) concerned.

Tax_Slave

Marcon said:

Tax_Slave said:

I thought I understood this and now I read below that adds confusion.
I have blood cancer and there is a high probability almost certain I will die before I’m 75, unless in next few years there is a miracle cure. I’m currently aged 60.
I have a pension pot that I have not touched due to having other income via final salary pensions that’s worth approx £200,000.
My understand is that if I don’t touch this pension pot and die at say 65, my wife will inherit the pot free of tax, let’s say it’s still worth £200,000 then with no growth.

if I take out for example £30,000 within my 25% limit tax free and leave £170,000 on the pot, my wife would inherit say £170,000 with no growth when I die at say 65.

Above was my understanding on how things stand currently.
The pension company will not allow my wife to leave the inherited pension fund invested and cash it out paying her out on my death.

Tonight I read an article in The Daily Mail that implies that that if I have touched the fund ie the taking out £30,000 example then when I die she will not inherit what’s left aka £170,000 with no growth tax free?

see extract from Mail article below. It’s the first paragraph that makes me think she would pay tax if the pension pot has been touched.
Is this correct?

”Under current rules, if you die before age 75 and haven’t yet accessed your pension, your beneficiaries can inherit your defined contribution pension completely tax-free if it is under the lifetime allowance.'

But he says of the new rules under consideration: 'Where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.”

Thanks 
Kevin 

These 'new rules' are very much at an early stage of being 'under consideration'; who knows if any such change in the law will ever be made?

More info here on the current situation: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/pensions-after-death

Your final salary pensions, as I'm sure you are aware, will pay out a spouse's pension in line with the rules of the scheme(s) concerned.

It’s not the new rules I’m worried about , but the bit where it implies under current rules if ‘untouched’ it’s inherited tax free. This implied that if it’s been touched it’s nit inherited tax free?

Linton

Tax_Slave said:

Marcon said:

Tax_Slave said:

I thought I understood this and now I read below that adds confusion.
I have blood cancer and there is a high probability almost certain I will die before I’m 75, unless in next few years there is a miracle cure. I’m currently aged 60.
I have a pension pot that I have not touched due to having other income via final salary pensions that’s worth approx £200,000.
My understand is that if I don’t touch this pension pot and die at say 65, my wife will inherit the pot free of tax, let’s say it’s still worth £200,000 then with no growth.

if I take out for example £30,000 within my 25% limit tax free and leave £170,000 on the pot, my wife would inherit say £170,000 with no growth when I die at say 65.

Above was my understanding on how things stand currently.
The pension company will not allow my wife to leave the inherited pension fund invested and cash it out paying her out on my death.

Tonight I read an article in The Daily Mail that implies that that if I have touched the fund ie the taking out £30,000 example then when I die she will not inherit what’s left aka £170,000 with no growth tax free?

see extract from Mail article below. It’s the first paragraph that makes me think she would pay tax if the pension pot has been touched.
Is this correct?

”Under current rules, if you die before age 75 and haven’t yet accessed your pension, your beneficiaries can inherit your defined contribution pension completely tax-free if it is under the lifetime allowance.'

But he says of the new rules under consideration: 'Where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.”

Thanks 
Kevin 

These 'new rules' are very much at an early stage of being 'under consideration'; who knows if any such change in the law will ever be made?

More info here on the current situation: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/pensions-after-death

Your final salary pensions, as I'm sure you are aware, will pay out a spouse's pension in line with the rules of the scheme(s) concerned.

It’s not the new rules I’m worried about , but the bit where it implies under current rules if ‘untouched’ it’s inherited tax free. This implied that if it’s been touched it’s nit inherited tax free?

See https://www.gov.uk/tax-on-pension-death-benefits.  There it says that money from an inherited  drawdown fund first accessed after April 2015 is tax free.   From what you say about your age it would appear that your pension is OK.

Marcon

Tax_Slave said:

Marcon said:

Tax_Slave said:

I thought I understood this and now I read below that adds confusion.
I have blood cancer and there is a high probability almost certain I will die before I’m 75, unless in next few years there is a miracle cure. I’m currently aged 60.
I have a pension pot that I have not touched due to having other income via final salary pensions that’s worth approx £200,000.
My understand is that if I don’t touch this pension pot and die at say 65, my wife will inherit the pot free of tax, let’s say it’s still worth £200,000 then with no growth.

if I take out for example £30,000 within my 25% limit tax free and leave £170,000 on the pot, my wife would inherit say £170,000 with no growth when I die at say 65.

Above was my understanding on how things stand currently.
The pension company will not allow my wife to leave the inherited pension fund invested and cash it out paying her out on my death.

Tonight I read an article in The Daily Mail that implies that that if I have touched the fund ie the taking out £30,000 example then when I die she will not inherit what’s left aka £170,000 with no growth tax free?

see extract from Mail article below. It’s the first paragraph that makes me think she would pay tax if the pension pot has been touched.
Is this correct?

”Under current rules, if you die before age 75 and haven’t yet accessed your pension, your beneficiaries can inherit your defined contribution pension completely tax-free if it is under the lifetime allowance.'

But he says of the new rules under consideration: 'Where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.”

Thanks 
Kevin 

These 'new rules' are very much at an early stage of being 'under consideration'; who knows if any such change in the law will ever be made?

More info here on the current situation: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/pensions-after-death

Your final salary pensions, as I'm sure you are aware, will pay out a spouse's pension in line with the rules of the scheme(s) concerned.

It’s not the new rules I’m worried about , but the bit where it implies under current rules if ‘untouched’ it’s inherited tax free. This implied that if it’s been touched it’s nit inherited tax free?

The link I gave covers this - here's the relevant bit:

If no money has been taken from the pension when you die

Your beneficiaries can usually withdraw all the money as a lump sum, set up a guaranteed income (an annuity) with the proceeds or, they may also be able to set up a flexible retirement income (pension drawdown).

It's not always possible for your beneficiaries to use flexible retirement income to draw down from the pension pot rather than taking a lump sum or annuity. However, they may be able to move the pension to another provider to do this. You should check what death benefits different pension schemes offer.

If you've chosen to take a flexible retirement income and are in pension drawdown when you die

Your beneficiaries can take the remaining money left as a lump sum, set up a guaranteed income (an annuity) with the proceeds or, they may also be able to continue with flexible retirement income (pension drawdown).

It's not always possible for your beneficiaries to use flexible retirement income to draw down from the pension pot rather than taking a lump sum or annuity. However, they may be able to move the pension to another provider to do this. You should check what death benefits different pension schemes offer.

Tax_Slave

Marcon said:

Tax_Slave said:

Marcon said:

Tax_Slave said:

I thought I understood this and now I read below that adds confusion.
I have blood cancer and there is a high probability almost certain I will die before I’m 75, unless in next few years there is a miracle cure. I’m currently aged 60.
I have a pension pot that I have not touched due to having other income via final salary pensions that’s worth approx £200,000.
My understand is that if I don’t touch this pension pot and die at say 65, my wife will inherit the pot free of tax, let’s say it’s still worth £200,000 then with no growth.

if I take out for example £30,000 within my 25% limit tax free and leave £170,000 on the pot, my wife would inherit say £170,000 with no growth when I die at say 65.

Above was my understanding on how things stand currently.
The pension company will not allow my wife to leave the inherited pension fund invested and cash it out paying her out on my death.

Tonight I read an article in The Daily Mail that implies that that if I have touched the fund ie the taking out £30,000 example then when I die she will not inherit what’s left aka £170,000 with no growth tax free?

see extract from Mail article below. It’s the first paragraph that makes me think she would pay tax if the pension pot has been touched.
Is this correct?

”Under current rules, if you die before age 75 and haven’t yet accessed your pension, your beneficiaries can inherit your defined contribution pension completely tax-free if it is under the lifetime allowance.'

But he says of the new rules under consideration: 'Where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.”

Thanks 
Kevin 

These 'new rules' are very much at an early stage of being 'under consideration'; who knows if any such change in the law will ever be made?

More info here on the current situation: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/pensions-after-death

Your final salary pensions, as I'm sure you are aware, will pay out a spouse's pension in line with the rules of the scheme(s) concerned.

It’s not the new rules I’m worried about , but the bit where it implies under current rules if ‘untouched’ it’s inherited tax free. This implied that if it’s been touched it’s nit inherited tax free?

The link I gave covers this - here's the relevant bit:

If no money has been taken from the pension when you die

Your beneficiaries can usually withdraw all the money as a lump sum, set up a guaranteed income (an annuity) with the proceeds or, they may also be able to set up a flexible retirement income (pension drawdown).

It's not always possible for your beneficiaries to use flexible retirement income to draw down from the pension pot rather than taking a lump sum or annuity. However, they may be able to move the pension to another provider to do this. You should check what death benefits different pension schemes offer.

If you've chosen to take a flexible retirement income and are in pension drawdown when you die

Your beneficiaries can take the remaining money left as a lump sum, set up a guaranteed income (an annuity) with the proceeds or, they may also be able to continue with flexible retirement income (pension drawdown).

It's not always possible for your beneficiaries to use flexible retirement income to draw down from the pension pot rather than taking a lump sum or annuity. However, they may be able to move the pension to another provider to do this. You should check what death benefits different pension schemes offer.

Sorry for delay in replying, I had treatment yesterday and next day is always a slow start.

Thanks for replies and clearing up my question. It seems the wording of the Daily Mail article is misleading.
Hoping the taxation idea doesn’t become law.