Freedom to pass on an unused defined contribution pension

People with defined contribution pension savings will no longer have to worry about their pension savings being taxed at 55% on death. Commencing from 6 April 2015, individuals will have the freedom to pass on their unused defined contribution pension to any nominated beneficiary when they die, rather than paying the 55% tax charge which currently applies to pensions passed on at death. If you wish to seek independent financial advice on how to ensure this is do correctly, our financial advisers at Hutt Professional will be able to offer you the independent financial advice you need.

Individuals with a drawdown arrangement or with uncrystallised pension funds will be able to nominate a beneficiary to pass their pension to if they die. If the individual dies before they reach the age of 75, they will be able to give their remaining defined contribution pension to anyone as a lump sum completely tax-free, if it is in a drawdown account or uncrystallised.

The person receiving the pension will pay no tax on the money they withdraw from that pension, whether it is taken as a single lump sum or accessed through drawdown. Anyone who dies with a drawdown arrangement or with uncrystallised pension funds at or over the age of 75 will also be able to nominate a beneficiary to pass their pension to.

The nominated beneficiary will be able to access the pension funds flexibly, at any age, and pay tax at their marginal rate of Income Tax. There are no restrictions on how much of the pension fund the beneficiary can withdraw at any one time. There will also be an option to receive the pension as a lump sum payment, subject to a tax charge of 45%. If you have any questions on this then please do not hesitate to contact us, our financial advisers will be able to offer you great independent financial advice.

The tax-free pension commencement lump sum (usually 25% of an individual’s pot) will continue to be available.

 

If you have any questions about Tax-free lump sum on death and wish to seek independent financial advice, we at Hutt Professional have financial advisers with many years of experience and who are highly qualified that would be able to offer you that independent financial advice that you need.

 

source: http://www.goldminemedia.co.uk/