Pension Death Benefits Pre-75 Should Be Completely Tax Free!

Richard Higgs, Chartered Independent Financial Planner

However – a word of caution. Although pension tax treatment for a pre-75 death can be extremely generous, financial planning is critical. Why?

Because pension death benefits pre-75 are only completely tax free if benefits are moved into a pension plan that allows flexi-access beneficiary drawdown.

To protect your family from paying tax on any inherited pension benefits, you will need to do what you can to ensure that you do not die holding any manner of legacy pension schemes you may have taken out over the years.

Some older pension plans may have associated guaranteed benefits, and it may not be possible or suitable to move them, but many plans will be able to be changed to a flexi-access option. If you currently have old pension plans, or any significant pension plan for that matter, take advantage of a complimentary pension review with us so we can help ensure your dependents benefit from tax free pension benefits should you die before age 75.

The advice requirements do not end there. The beneficiary nomination for drawdown will not be valid unless you actually nominate the receiving dependant or individual. This is usually done via ‘Expression of Wish’ forms which include a ‘Cascade of Wishes’ (this allows you to nominate for example your spouse, then children to receive benefits for maximum protection of wealth) which should also tie in with your other estate planning and Will advice. We can organise all of this for you here at Harold Stephens.

You have done an excellent job saving and investing for your retirement. Now let’s ensure that your pension remains tax free for your beneficiaries even after you’ve gone.

We record regular video updates on a range of later life financial topics – search ‘Harold Stephens IFA’ on YouTube.

To book a complimentary pension review, call 0117 3636 212 or email
50 High Street, Westbury on Trym, Bristol BS9 3DZ.