Pensions and dying

[QuartzDad]

Cheery eh?

Currently 53, not planning on retiring soon. Hoping to not pop my clogs either but if I did what happens to my pension pots? 5 vanilla DC pots, only contributing to one currently.

Does my next of kin get the whole current value as a lump sum? Are they liable for tax on it? Or does something else happen?

Slightly embarrassed that I don't know the answer to this...

[gotoPzero]

Depends on the pension tbh, but as a (general) rule DC pensions will become part of your estate.

If you have 5 pensions you might want to consider a tidy up, going OT sorry.

Edited by gotoPzero on Thursday 13th October 14:37

[randlemarcus]

Thats absolutely not my understanding of how DC pensions work. I understood that the expression of wishes form meant that, like Death in Service etc, the trustees are not bound by your EoW and thus its not part of the estate from any perspective, apart from the viewpoint of the person getting the money.

[gotoPzero]

Just to add, if it does become part of your estate there will then be rules that need to be followed.

https://www.unbiased.co.uk/life/pensions-retiremen...

[QuartzDad]

gotoPzero said:

Just to add, if it does become part of your estate there will then be rules that need to be followed.

https://www.unbiased.co.uk/life/pensions-retiremen...

Thanks all, that link is very helpful. Will check that all my EoW are up-to-date.

Although I have five pots it's across just three providers; Aviva, Pru, Scottish Widows x 3. Rightly or wrongly, I took the easy route and rationalised that but not combining them I was avoiding the possibility that I would choose the worst future performer to be the consolidated pot.

[Mr Pointy]

Just to add that this sticky thread is meant to assist with exactly this type of question.

https://www.pistonheads.com/gassing/topic.asp?h=0&...

[Abdul Abulbul Amir]

gotoPzero said:

Depends on the pension tbh, but as a (general) rule DC pensions will become part of your estate.

If you have 5 pensions you might want to consider a tidy up, going OT sorry.

Edited by gotoPzero on Thursday 13th October 14:37

This is not correct.

DC pensions sit outside your estate, for IHT and beneficiary purposes. Make sure you fill in the expression of wish details.

If you die under the age of 75 your beneficiaries have two years to complete the paperwork to access the funds tax free. If you die after the age of 75 they will pay their marginal rate of income tax on any funds they draw down out of the pot.

[gotoPzero]

Abdul Abulbul Amir said:

gotoPzero said:

Depends on the pension tbh, but as a (general) rule DC pensions will become part of your estate.

If you have 5 pensions you might want to consider a tidy up, going OT sorry.

Edited by gotoPzero on Thursday 13th October 14:37

This is not correct.

DC pensions sit outside your estate, for IHT and beneficiary purposes. Make sure you fill in the expression of wish details.

If you die under the age of 75 your beneficiaries have two years to complete the paperwork to access the funds tax free. If you die after the age of 75 they will pay their marginal rate of income tax on any funds they draw down out of the pot.

I think you are confusing what I am saying with IHT "inside" and "outside" of estates for purposes of IHT. I am not referring to IHT, like at all.

[Abdul Abulbul Amir]

gotoPzero said:

I think you are confusing what I am saying with IHT "inside" and "outside" of estates for purposes of IHT. I am not referring to IHT, like at all.

It doesn't sit inside your estate for any purpose.

[randlemarcus]

gotoPzero said:

I think you are confusing what I am saying with IHT "inside" and "outside" of estates for purposes of IHT. I am not referring to IHT, like at all.

Not to be deliberately argumentative, but your use of the word estate might be confusing. At no stage does your estate get the money - it's paid by the trustees to the people in your EoW, bypassing the estate (when defined normally). I see where you're coming from, but that's applying a very loose definition to something that already has a fairly tight definition

See also Death in Service benefits.

[gotoPzero]

Abdul Abulbul Amir said:

gotoPzero said:

I think you are confusing what I am saying with IHT "inside" and "outside" of estates for purposes of IHT. I am not referring to IHT, like at all.

It doesn't sit inside your estate for any purpose.

Would you prefer me use the word asset?

[gotoPzero]

randlemarcus said:

gotoPzero said:

I think you are confusing what I am saying with IHT "inside" and "outside" of estates for purposes of IHT. I am not referring to IHT, like at all.

Not to be deliberately argumentative, but your use of the word estate might be confusing. At no stage does your estate get the money - it's paid by the trustees to the people in your EoW, bypassing the estate (when defined normally). I see where you're coming from, but that's applying a very loose definition to something that already has a fairly tight definition

See also Death in Service benefits.

Its just my grasp of the English language

[Abdul Abulbul Amir]

gotoPzero said:

Abdul Abulbul Amir said:

gotoPzero said:

I think you are confusing what I am saying with IHT "inside" and "outside" of estates for purposes of IHT. I am not referring to IHT, like at all.

It doesn't sit inside your estate for any purpose.

Would you prefer me use the word asset?

You can if you wish, it just doesnt add any value to answering the original OP.

Anyhow, the linked article is pretty explanatory.