![]() However, transferring out of a defined benefit/final salary scheme is unlikely to be in the best interests of most people.įinancial advice can play a key role in managing the process, aiding not only with the initial naming of beneficiaries but also providing support for periodic reviews and ensuring a more considered and thoughtful process behind decision making. Pensions are increasingly viewed as a tool to pass on wealth efficiently, not just to the immediate next generation but also to the generation after that. In many instances, this change has led to transfers out of defined benefit arrangements as often more can be passed on to loved ones from one’s pensions than from other assets. It has become more important than ever to ensure an expression of wish is not just in place but completed with thought to allow optimum efficiency.Īs a reminder, until 5th April 2015, lump sums paid out post-75 were subject to an automatic 55% charge, as were lump sums from crystalized funds for death pre-75.įrom 6th April 2015, commensurate with pensions freedoms and subject to the LTA, the benefit is tax free for deaths pre-75 and subject to beneficiaries’ marginal tax rates for death above that age. ![]() Given a frozen IHT nil rate band and property inflation, death benefit planning deserves an increasing higher priority, with an estimated £6.7 billion inheritance tax (IHT) collected for the year to March 2022.
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