How Can You Pass On Your Pension Benefits?
You have worked all your life, saving for your retirement – and wouldn’t it be great if you could pass on your remaining money to your loved ones after your death? Well, you could – depending on what type of pension you have and how you have accessed it in your retirement.
Thanks to the way pension are taxed (since 2015), more of your fund can survive your death and provide income or a nest egg for your loved ones after you have passed.
It is always difficult to have discussions about death, but sadly it will happen to everyone. As your pension could have a lasting effect on other people, it is important to talk to your spouse, partner, children or other family members, when thinking about how you take your pension savings.
For example – if you choose an annuity, that can typically provide an income for you for as long as you live – whether that’s 10 or 50 years! On the other hand, if you want the annuity income to go to a loved one, you will need to consider either an annuity with a guarantee period or a joint-life annuity.
On the other hand, if you have not yet accessed your pension or you have made some withdrawals but left money invested, this can potentially be passed to a beneficiary after your death. The specifics depend on your individual circumstances and scheme rules.
If your scheme allows a beneficiary – make sure you name them! In any case, you must obtain professional financial advice to assess your own specific situation.
Even your state pension can sometimes be passed on – for example, if you are a man born before 1951 or a woman born before 1953, or if you are receiving Additional State Pension and your spouse has reached pensionable age.
There is much more flexibility now in how you put together and access your pension. For example, you no longer need to leave small pension pots where they were established but can bring them together in one pot. Whether that is the right decision for you, will be something a financial advisor will be able to help you to determine.
There is never a ‘good time’ to get round to things like pension planning or writing a will. No-one wants to think that one day they won’t be here. But it is a reality. And sooner is definitely better than…too late!
Contact us to find out more.