Stand-out Q – beneficiary options…

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MON, 17 NOV 2014

Our Technical Hub provides access to a wide range of pension tax and trust technical resources. Every now and then we post tweets covering stand out questions from our technical content and our answers in case others might also find them helpful. As Twitter’s character restrictions only allow for the bare bones of the Q&A we link to the details here, too.

Question
The original member died age 78 two years ago, leaving his surviving spouse to take a dependant’s pension. She has now died aged 73, and there are no remaining dependants, though there are children. What are the options in light of the proposed legislation changes?

Answer
Our understanding of the draft legislation is that the treatment of the death benefits will be determined at the point of the benefits being paid out and not the actual date of death. If this decision can be delayed till after 5 April 2015, then the new legislation will apply. The non-dependant children could elect to have a lump sum paid, or income from a nominee’s flexi-access drawdown fund after that date. It is also our understanding that as the dependant was under age 75, even though the original member was over age 75 at their death, then the benefits can be paid out free of any tax.

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