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In The Event of Your Death

Planning your retirement isn't only about your retirement income. Your retirement fund is also an asset and you need to consider and understand what you want to happen when you die.

Choices exist for dealing with any pension fund you may have left when you die. What happens also depends on how old you are when you die.

It's good to understand

IF YOU DIE BEFORE YOU REACH AGE 75

There are three choices each receiving different tax treatment:
  • Pay the remaining fund as a tax-free lump sum to anyone you choose.
  • Use the remaining fund to create a flexi-access drawdown for any beneficiary. This will pay a tax-free income for the life of the beneficiary.
  • Use the remaining fund to buy an annuity for your spouse or another financial dependant.

IF YOU DIE AFTER YOU REACH AGE 75

Again there are three choices each receiving different tax treatment:
  • Pay the remaining fund as a lump sum to anyone you choose. The beneficiary will pay tax at their marginal rate. If you leave the money to a trust, a 45% tax charge will apply.
  • Use the remaining fund to create a flexi-access drawdown for any beneficiary. The payments will form part of the beneficiary's taxable income.
  • Use the remaining fund to buy an annuity for your spouse or other financial dependant. The payment will form part of the beneficiary's taxable income.
Guide to Retirement Download

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