Death Benefits

If you die after taking benefits, what remains in the pension can be passed to your chosen nominee or successor. The expression of wish is an imperative factor in keeping the members wish up to date to help pay any benefits on death. While the expression of wish is not binding, keeping the expression of wish up to date also helps the trustees pay the benefits under the discretion and potentially mitigating Inheritance Tax (IHT). The legislation now reflects on two main factors: The age of the member when they died i.e. before age 75 or after age 75. If the benefits are paid within a 2-year rule of the date the scheme administrator first knew of the member’s death or the date that the scheme administrator could of reasonably have been expected to know of it. The funds can usually be paid tax-free before age 75 as long as the above rules have been applied, or subject to recipient’s marginal rate of tax after age 75. Funds paid out of the 2-year window prior to age 75 will be taxed at the recipient’s marginal rate of tax.
Death Benefits under drawdown are generally more favourable now through the nominee, successor rule. A nominee is any individual, other than a dependant, nominated by the member to receive the benefits from a pension plan upon their death. A successor is an individual nominated by a dependant or a nominee to continue to receive the dependants or nominee’s pension upon their death. Your money can now be passed through generations of the family or any nominated individual(s) where funds are still available from the original member’s pension pot. It is important that the member completes an expression of wish form in order to nominate who they would like to receive the benefits. This is an important requirement that helps us to pay any benefits on death. While the expression of wish is not binding, keeping the expression of wish up to date also helps the trustees pay the benefits under the terms of the trust thus potentially mitigating inheritance tax (IHT). The benefits payable will depend on the following factors: The age of the member when they died i.e. before age 75 or after age 75. If the benefits are paid within 2 years of the date the scheme administrator first knew of the member’s death or the date that the scheme administrator could of reasonably have been expected to know of it. The funds can usually be paid tax-free before age 75 if the above rules have been met, or subject to the recipient’s marginal rate of tax after age 75. Funds paid out of the 2-year window prior to age 75 will be taxed at the recipient’s marginal rate of tax.
You can update your beneficiaries as and when you wish. Please contact us to request the required documentation to be sent to the member to complete.
You can name anyone you wish as a beneficiary of your pension scheme including; family members, friends or registered charities. However, we must hold a record of this as should there be no recorded beneficiaries, (i.e. legally deemed “intestate”) benefits may not be paid in accordance with your wishes.
This product is a UK registered pension scheme written under Discretionary Trust, any lump sum paid on death is normally paid at the Trustee’s discretion and thus considered to have fallen outside of the member’s Estate.