Sipp beneficiary

Nebulous2

I don't think these recent comments are accurate, though Dunstonh will likely be along to confirm. 

My understanding is that an inherited pension does not have 25% tax-free, but can be drawn at any age. 

The OP can transfer to a specific beneficiary pension and drawdown as it suits him/her - potentially saving a great deal of tax and possibly child benefit as well. 

Albermarle

Nebulous2 said:

I don't think these recent comments are accurate, though Dunstonh will likely be along to confirm. 

My understanding is that an inherited pension does not have 25% tax-free, but can be drawn at any age. 

The OP can transfer to a specific beneficiary pension and drawdown as it suits him/her - potentially saving a great deal of tax and possibly child benefit as well. 

On the first point I think if the deceased was over 75 it is 100% taxable, but if under 75 then 100% non taxable.
A bit of a crazy rule which was expected to get changed in the budget, but not mentioned AFAIK.

I think you are right that a beneficiary pension can be withdrawn from at any age.

molerat

I don't believe there is any sort of flexible access though so the 3 given choices of transfer to another pension with no access until 57+, buy a taxable annuity income or whole pot as a highly taxed lump sum.  It looks like they would get £46.5K tax deducted on the lump sum and only be able to reclaim just over £2K so a big hit with some possible knock on effects.

Nebulous2

molerat said:

I don't believe there is any sort of flexible access though so the 3 given choices of transfer to another pension with no access until 57+, buy a taxable annuity income or whole pot as a highly taxed lump sum.  It looks like they would get £46.5K tax deducted on the lump sum and only be able to reclaim just over £2K so a big hit with some possible knock on effects.

I'm far from a pension expert, but I don't think that is right. 

Here's an HMRC manual on beneficiary pensions. 

PTM072410 - Death benefits: types of pension: beneficiary’s flexi-access drawdown from 6 April 2015: overview and changes from 6 April 2015 - HMRC internal manual - GOV.UK

Under the section 

Conditions for paying a beneficiary’s drawdown pension 

It says:- 

There is no lower or upper age limit for paying a beneficiary’s' drawdown pension.

HappyHarry

Albermarle said:

Nebulous2 said:

I don't think these recent comments are accurate, though Dunstonh will likely be along to confirm. 

My understanding is that an inherited pension does not have 25% tax-free, but can be drawn at any age. 

The OP can transfer to a specific beneficiary pension and drawdown as it suits him/her - potentially saving a great deal of tax and possibly child benefit as well. 

On the first point I think if the deceased was over 75 it is 100% taxable, but if under 75 then 100% non taxable.
A bit of a crazy rule which was expected to get changed in the budget, but not mentioned AFAIK.

I think you are right that a beneficiary pension can be withdrawn from at any age.

You are correct.

Albermarle

OP,
If we assume that you do not want to take it all at once and get hammered by tax and that you do not want to buy an annuity, then transferring it to a new pension seems the best bet.
Then you can either leave it as a pot for retirement, or withdraw amounts as and when needed, without excessive tax.
You might be able just to open a new pension with the same provider. Who is it by the way ?

DRS1

I assume that you cannot mix a beneficiary drawdown pension scheme with a normal personal pension scheme - otherwise you'd get confusion over the 25% TFLS and the age at which you could draw a pension.

The guidance also says a pension scheme does not have to offer beneficiary drawdown pension.  It looks as if the scheme of which the OP is a beneficiary doesn't offer it.  Presumably he would have to find a scheme which did offer it and transfer to that if he wanted to go this route.  Does anyone know if such schemes exist?

run_rabbit55

Albermarle said:

OP,
If we assume that you do not want to take it all at once and get hammered by tax and that you do not want to buy an annuity, then transferring it to a new pension seems the best bet.
Then you can either leave it as a pot for retirement, or withdraw amounts as and when needed, without excessive tax.
You might be able just to open a new pension with the same provider. Who is it by the way ?

It's with aj bell. I'm only 43, and yes i would want to leave the majority saved just taking smaller amounts. Cant find any information on being able to do this though. Everything I see is from age 55

QrizB

run_rabbit55 said:

Albermarle said:

OP,
If we assume that you do not want to take it all at once and get hammered by tax and that you do not want to buy an annuity, then transferring it to a new pension seems the best bet.
Then you can either leave it as a pot for retirement, or withdraw amounts as and when needed, without excessive tax.
You might be able just to open a new pension with the same provider. Who is it by the way ?

It's with aj bell. I'm only 43, and yes i would want to leave the majority saved just taking smaller amounts. Cant find any information on being able to do this though. Everything I see is from age 55

Your probably looking at general SIPP info, not anything specific to beneficiary pensions.

As @Nebulous2 says above, these can be drawn at any age.

sheramber

I don’t know if it is different but I inherited my husband’s SIPP. He was under 75 so it is non taxable. I was over pension age.

I decided to transfer it to a SIPP  and was advised to consult a financial advisor.

I could invest with the same pension company or transfer to any other I chose.

The adviser I consulted recommended I stay with the same pension company.

They term it a bereavement pension.