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.
We cover the rules for inheriting a drawdown pension here →
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.
Frequently Asked Pensions Advice Questions
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