Private Pension Beneficiary Account product

pjs493

My husband died a few months ago suddenly and unexpectedly at a relatively young age. I'm struggling to find a high street bank or other financial institution that offers a Beneficiary Account product to transfer his private pension to for me to use when I retire.

My husband paid into a private pension fund and I am the sole beneficiary of that money.

Given my relatively young age (early 40s) and having no immediate need for the pension money, I have decided that it is best to put it into a beneficiary pension account until I retire (it will be ring-fenced and will continue to move with the markets until I decide to retire and draw on the money). This option was suggested to me by my husband's financial advisor as it means there will be no tax for me to pay on the money when I eventually draw on it.

However, I'm struggling to find a high street bank option that offers this product. I've checked the banks I use and they do not offer a beneficiary account. A call centre advisor in the pensions department of my main bank suggested I take the lump sum payments and pay that into my own private pension, although this will mean I get taxed on the money when I retire and start using it.

So far I'm struggling to find financial institutions that offer a beneficiary pension product from doing Google searches. There are lots of search results discussing leaving private pensions to a beneficiary but none about how the beneficiary can go about holding that money in an account.

My husband's financial advisor has suggested I leave it with the company it is currently with and the account will simply change into my name and become a beneficiary account product. But his financial advisor charges quite high fees that I was hoping to avoid. The only reason he was with the company in the first place is because his parents suggested he use them (they have substantially more in assets than us so I never really understood the benefit to us compared to their situation which I why I kept my ISA etc with my high street bank.

Any suggestions of companies offering a beneficiary pension account or other options open to me would be gratefully received.

Flugelhorn

I think that the idea of leaving a pension to a beneficiary implies that the pension stays in a pension pot ie with a company rather than just a bank  account, that is how it is protected from tax - not sure what the options are - maybe there are pension companies that you could move it to that would charge less??

QrizB

What you are looking for is an investment product, not a banking product. High street banks are unlikely to offer them, other than via their investment arms.

If you don't feel that you get sufficient benefit from your current (I)FA, you can switch to a different one or DIY.

How high are the fees?

pjs493

QrizB said:

What you are looking for is an investment product, not a banking product. High street banks are unlikely to offer them, other than via their investment arms.

If you don't feel that you get sufficient benefit from your current (I)FA, you can switch to a different one or DIY.

How high are the fees?

Sorry, I wasn't clear that I had been talking to the investment arm of my high street bank. That's where my private pension, stocks and shares ISA and JISAs for our children are.

The initial fee to stay with the financial advisor my husband used will be £750 (this is apparently 50% of their usual fee - they're giving me a discount because they already deal with the pension in my husband's name). That brings me on as one of their clients and they can then offer me financial advice. This seems a bit expensive to me just to change the pension into a beneficiary account that will just sit there for the next 25+ years until I reach retirement age. I have no intention of using them for any other services.

So far we've exchanged a few emails and had a Teams call to discuss my husband's investments which all come under the fees he had been paying. My understanding is that he paid an initial fee years ago and they take their ongoing fees out of his investments periodically by selling the requisite number of shares to cover their fees (similar to how my high street bank operates when it comes to my investments but I get less of a personalised service - I also pay considerably less in fees).

Do you know any financial institutions that offer a beneficiary pension account? So far I've only been able to identify Aviva, Standard Life, and potentially Scottish Widows (although it's not entirely clear if the latter does this from their website

Albermarle

I can not give you a definitive answer but I would think that one of the modern SIPP providers would be happy to deal with a beneficiary pension, although you may to convert the current pension to your own name and then transfer it.
These two have good reputations and maybe not of great importance but both are currently offering bonus cashbacks for transferring in to them.
SIPP | A Which? Recommended Provider | Fidelity
Self-Invested Personal Pension (SIPP) - Hargreaves Lansdown (hl.co.uk)

Scottish Widows do not have the greatest reputation for customer service.

Marcon

pjs493 said:

Do you know any financial institutions that offer a beneficiary pension account? So far I've only been able to identify Aviva, Standard Life, and potentially Scottish Widows (although it's not entirely clear if the latter does this from their website

There's no specific product called a 'beneficiary pension account'.

 You can transfer to any personal pension product which will accept the transfer - and virtually all will. 

There is no tax to pay whenever you withdraw the funds because your husband was under 75 when he died. That applies whether you draw cash out now or in the future.

However, if you withdraw the cash now, and then pay it back into a pension in your own name (rather than transferring it directly from your late husband's pension to your own pension) will mean you are taxed on the proceeds of your own pension when you later come to draw it.

pjs493

Flugelhorn said:

I think that the idea of leaving a pension to a beneficiary implies that the pension stays in a pension pot ie with a company rather than just a bank  account, that is how it is protected from tax - not sure what the options are - maybe there are pension companies that you could move it to that would charge less??

Sorry, I wasn't clear in my original post. I'm looking to transfer the pension from the company my husband was using and was hoping to have it held by the investment arm of my high street bank which is where my own private pension and ISA investments are. I don't want to take a lump sum payment into my bank account, I want a beneficiary pension product where the money stays in a pension pot ring-fenced until I reach retirement age and start to draw from it. The company he used is really designed for people with much more money than we have/had and the fees they charge just seem excessive given the modest figures in question.

My husband, under the advice of his parents years ago before we married, engaged a financial advisor (the same one they use). I never really saw the point of my husband investing in this way. I understand why his parents do (they have considerable assets that they've built up over decades, sold property and businesses when they retired, and invested all that money). My husband and I comparatively had much less and he was on the very basic service offered by the investment firm. He held a private pension and a stocks and shares ISA with them which together amount to less than £40,000 (fluctuating with the markets). I also have a private pension and stocks and shares ISA but use the investment arm of my high street bank.

What I'm looking for is names of companies that offer a beneficiary pension product so I can move the money and avoid the expensive fees that the firm my husband was using charge.

Linton

Many SIPP companies are discussed on this forum, all should provide a pretty good service.

Examples: HL (Hargreaves Lansdown). AJBell, II (Interactive Investors ), Fidelity are four major ones that come immediately to mind. The charges are explained on their websites  You could call their helpline to confirm they will handle Beneficiary accounts - I would be surprised if they did not.

Marcon

pjs493 said:

I'm looking to transfer the pension from the company my husband was using and was hoping to have it held by the investment arm of my high street bank which is where my own private pension and ISA investments are. I don't want to take a lump sum payment into my bank account, I want a beneficiary pension product where the money stays in a pension pot ring-fenced until I reach retirement age and start to draw from it. 

What I'm looking for is names of companies that offer a beneficiary pension product so I can move the money and avoid the expensive fees that the firm my husband was using charge.

If you have a private pension with a high street bank, have you checked if they will accept a transfer in of your late husband's pension savings, whether to the same pension as your own, or a second pension in your own name? In both cases, they'd need to ensure that the amount transferred in is 'marked' to ensure it is known to be an inherited pension and thus avoid any tax charges on withdrawal.

Otherwise as I've mentioned in my previous thread, pretty much any pension provider should be able to help. It might simply be a bizarre bit of wire crossing because the terminology providers use tends to be 'inherited pension' (a 'beneficiary pension' can be something a bit different - ie a regular monthly income, as opposed to the lump sum you are looking at).

Jowwie

I am not a financial adviser. Pensions are a bit of a minefield. Do you know what the ongoing fees of this financial adviser would be? Can you deal direct with the pension fund and bypass the adviser? Do you know what fees the pension fund is charging?

Transferring the funds into such as a Fidelity SIPP yourself, which you then invest in FTSE market tracker funds could have substantially lower fees. Over the course of 25 years the low fees could more than make up for the tax hit you are looking to avoid. Also avoids the costs of the advisor. You need to be comfortable with managing the pension investments yourself though.

Whilst the pot would be taxable in your own pension, if you are looking to retire before state pension age you can currently draw circa £17k per year tax free if you have no other taxable income.

Might be worth asking on the pensions forum?
https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

pjs493

Marcon said:

pjs493 said:

I'm looking to transfer the pension from the company my husband was using and was hoping to have it held by the investment arm of my high street bank which is where my own private pension and ISA investments are. I don't want to take a lump sum payment into my bank account, I want a beneficiary pension product where the money stays in a pension pot ring-fenced until I reach retirement age and start to draw from it. 

What I'm looking for is names of companies that offer a beneficiary pension product so I can move the money and avoid the expensive fees that the firm my husband was using charge.

If you have a private pension with a high street bank, have you checked if they will accept a transfer in of your late husband's pension savings, whether to the same pension as your own, or a second pension in your own name? In both cases, they'd need to ensure that the amount transferred in is 'marked' to ensure it is known to be an inherited pension and thus avoid any tax charges on withdrawal.

Otherwise as I've mentioned in my previous thread, pretty much any pension provider should be able to help. It might simply be a bizarre bit of wire crossing because the terminology providers use tends to be 'inherited pension' (a 'beneficiary pension' can be something a bit different - ie a regular monthly income, as opposed to the lump sum you are looking at).

I have clarified with my bank that the only product they currently offer is the one I'm using for my own private pension. They have confirmed that they don't offer a beneficiary product where it could be ring-fenced in any way. The only way to transfer it to keep both pensions in one place would be to take a lump sum and then pay this into my own pension, but as you mention, there are tax implications for this down the line as it would be taxable, whereas the inherited pension will not be if it is held in a beneficiary account.

Thanks for the tip about terminology, I've just been using the terms that my husband's pension provider has been using. His financial advisor (while well qualified and well versed in pensions and tax implications etc) seems to be more used to dealing with pensions being inherited by people much later in life (where the over 75 rules might apply or with pensions that are already being used as an income source) and I suspect it isn't very often that he is dealing with the estate of someone who died unexpectedly so young.