Benjamin Franklin said that there were two certainties in life: death and taxes, and with pensions both come into play.
When you die, your pension does not die with you, and any remaining funds will be passed to your beneficiaries. The amount, and type of benefits, depends on how much remains in the fund, at what age you die and the benefit options chosen. Details on the options available can be found here.
What choices are there?
With the Hartsfield SSAS, again there is flexibility and choice. The remaining trustees have discretion over whom to pay benefits to, and will be guided by your wishes which you will have indicated in your will or via an ‘expression of wishes’ form. An expression of wishes form can be found here and you should keep this updated as and when there are changes to your circumstances.
Your beneficiaries may choose to take any remaining money as a lump sum. Equally, they may prefer to have a regular income until the fund is depleted. Your age at the time of death is now the key factor in determining whether your beneficiaries will receive the funds tax free. If you die before the age of 75, then any money paid to your beneficiaries either as a lump sum, or as regular payments, will be tax free. If you die after 75, then those payments will attract income tax at the beneficiaries’ marginal rates of tax. For further information please refer to our guidance notes.
Importantly, the funds held in your Hartsfield pension will not form part of your estate, and so will be treated as separate for inheritance tax purposes.
Overall, the approach to pensions is fairer and more flexible than it had been in the past – more can be passed to your loved ones, you have more choice, and you can therefore have more confidence in your investment.
For more information, and to chat through your options, please get in touch.