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Pension beneficiaries - how to calculate lump sum death benefit

Hello,

I'm hoping someone could help me, any support really appreciated. 

My uncle had taken out the 25% tax free amount from his pension pot but had not yet taken retirement before he died (he was still employed/in service, getting paid). How do you calculate how much is paid to the beneficiaries named on his pension portfolio? 

Thank you in advance

Comments

  • molerat
    molerat Posts: 33,543 Forumite
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    The pension provider will give the value.  If he had taken the 25% the remainder would be 3 times that amount at the date it was taken but it could have gone up or down from that date.
  • So I've been reading, and it seems to be that the entire remaining amount will be paid out. Is that correct? This is an old pension, closed and just sitting. He didn't draw down on it. He was under 75 when he passed away. Whatever is left in the pot, that would be split between the beneficiaries?

    Thanks again!
  • xylophone
    xylophone Posts: 45,426 Forumite
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    He named his beneficiaries with no percentages?

    If so, the administrators should make the payments as indicated in the form of nomination.
  • Albermarle
    Albermarle Posts: 25,982 Forumite
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    LDHarv said:
    So I've been reading, and it seems to be that the entire remaining amount will be paid out. Is that correct? This is an old pension, closed and just sitting. He didn't draw down on it. He was under 75 when he passed away. Whatever is left in the pot, that would be split between the beneficiaries?

    Thanks again!
    It is unlikely to be closed. The money will be invested and charges will be being levied/paid. The fact that it has not been paid into recently and the tax free cash has been paid out, does not mean it is closed.
    It may well vary in value between your Uncle's death and it being paid out, depending on how it is invested and how markets behave.

    Be aware the Trustees of the scheme have full discretion on who to pay it out to. Normally they will just follow what instructions have been left by your Uncle. Unless he has done something odd, like not leaving any to the family etc. In which case they may investigate further.
  • xylophone said:
    He named his beneficiaries with no percentages?

    If so, the administrators should make the payments as indicated in the form of nomination.
    No, it is split between 50/50 between my Mum and his other brother.
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    No, it is split between 50/50 between my Mum and his other brother.

    Then (while as explained above the Trustees have absolute discretion) it would normally be the case that the Trustees would make a payment of half the value of the pension to your mother and half to her brother-in-law.
  • Thank you for your help. Really appreciated.

    So for absolutely clarity, if there was £175K left in his pension pot after he (my uncle) had taken out his tax free allowance, that would be paid out to my mum and her brother 50/50 - £87,500 each tax free - as they are the two named beneficiaries? 

    Thank you all once again for your help.
  • Albermarle
    Albermarle Posts: 25,982 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    LDHarv said:
    Thank you for your help. Really appreciated.

    So for absolutely clarity, if there was £175K left in his pension pot after he (my uncle) had taken out his tax free allowance, that would be paid out to my mum and her brother 50/50 - £87,500 each tax free - as they are the two named beneficiaries? 

    Thank you all once again for your help.
    Yes assuming the Trustees argree which they normally do.
    Note that it will not be a cash payment but still as part of a pension. If the Uncle was under 75 when he died then the beneficiaries can get the money out of the pension tax free. Either all at once or in stages /as a regular income. If he was over 75 there will be some tax to pay . In which case it is usually better not to take it all out at once.
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