Can I Give My Pension to My Children?

Unfortunately my passing is inevitable and I have quite a big pension fund I’m unlikely to use completely. Can I pass my remaining pension pot on to my children? What are the tax implications if my children inherit my pension?

Question asked by Mark Rowlan
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I know how much my pension is worth
I know how much my pension costs
I have clear financial goals for my retirement

Answered by Andrew Jenkinson

New pension freedom legislation introduced in April 2015 has made it much easier to pass on your pension to your beneficiaries when you die. If you die before you reach the age of 75, then even if you have started to draw on it, you can pass on whatever left in your pension tax-free. Your children can then use it to give them a tax-free income or a tax-free lump sum.

Passing away after 75

If you die after the age of 75, then your children can still receive your pension, but any income they take from it will be taxed as income at their highest marginal rate of tax. They won’t have to pay any inheritance tax in most circumstances, but this is not guaranteed so seeking advice is always recommended.

Having bought an annuity…

If you’ve used your pension to buy an annuity, or income for life, then your income usually dies when you do, unless you have bought a joint life or guaranteed period annuity in which case an income will continue to be paid after your death.

If you would like to speak to one of our specialist pension advisors regarding your specific situation please get in touch.

annuity
 
pension tax relief
 
inheritance tax planning
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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