Uncrystallised Pension on Death.

loiner

Notwithstanding any potential budget changes of course:

I’m aware that the beneficiaries under an expression of wish for uncrystallised pension funds are not taxed if the pension holder dies before the age of 75. What I don’t understand is how the funds are paid to the beneficiaries. Is the fund simply ‘cashed in’ and the proceeds split between the beneficiaries, or is it split and transferred as an active pension fund to each of them?

How is it paid when the fund holder dies after the age of 75 and the funds are uncrystallised?

(I’m 73 and have a fund that I don’t need to cash in and it would take me into a higher tax bracket if I did so. My expression of wish names my children, but I may change this to the benefit of my grandchildren)

Mark_d

If you die before 75 then generally your pension is passed on free of income tax, unless it's huge, in which case it could be transferred directly into the beneficiaries pension scheme.  If you die after 75 then there is no way of the beneficiary avoiding tax.

HappyHarry

Death Post 75:

Providing the scheme supports beneficiary pensions then the beneficiary will have a choice as to whether to take a taxable lump sum or have a beneficiary pension which they can draw from as and when they want to.

If the scheme does not support a beneficiary pension then a taxable lump sum will be paid to the beneficiaries.

Do note that of the beneficiary is not dependant and has not been nominated, then they will not have the option of taking up a beneficiary pension.

Marcon

Mark_d said:

If you die before 75 then generally your pension is passed on free of income tax, unless it's huge, in which case it could be transferred directly into the beneficiaries pension scheme.  If you die after 75 then there is no way of the beneficiary avoiding tax.

Why would 'being huge' make any difference?

loiner said:

Notwithstanding any potential budget changes of course:

I’m aware that the beneficiaries under an expression of wish for uncrystallised pension funds are not taxed if the pension holder dies before the age of 75. What I don’t understand is how the funds are paid to the beneficiaries. Is the fund simply ‘cashed in’ and the proceeds split between the beneficiaries, or is it split and transferred as an active pension fund to each of them?

How is it paid when the fund holder dies after the age of 75 and the funds are uncrystallised?

(I’m 73 and have a fund that I don’t need to cash in and it would take me into a higher tax bracket if I did so. My expression of wish names my children, but I may change this to the benefit of my grandchildren)

Doesn't have to be uncrystallised.

Qyburn

HappyHarry said:

Death Post 75:

Providing the scheme supports beneficiary pensions then the beneficiary will have a choice as to whether to take a taxable lump sum or have a beneficiary pension which they can draw from as and when they want to.

Is that not limited to normal minimum pension age?

Marcon

Qyburn said:

HappyHarry said:

Death Post 75:

Providing the scheme supports beneficiary pensions then the beneficiary will have a choice as to whether to take a taxable lump sum or have a beneficiary pension which they can draw from as and when they want to.

Is that not limited to normal minimum pension age?

Good question - but the answer is no - not limited to minimum pension age.

Sarahspangles

Qyburn said:

HappyHarry said:

Death Post 75:

Providing the scheme supports beneficiary pensions then the beneficiary will have a choice as to whether to take a taxable lump sum or have a beneficiary pension which they can draw from as and when they want to.

Is that not limited to normal minimum pension age?

If you think about it, what is being provided is a spouse or dependent’s pension. It’s not their own pension provision.