Pensions  

Navigating pension death benefits

  • Explain the main changes introduced to pension death benefits in 2015
  • Understand who the eligible beneficiaries are
  • Understand how the taxation of death benefits work
CPD
Approx.30min

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However, there was a surprise announcement in the spring Budget that the LTA charge will be reduced to 0 per cent for the 2023-24 tax year before the LTA itself is abolished the following year from April 2024.

Draft legislation is expected shortly, but the removal of the LTA charge means it looks like there will be no upper limit for pension death benefits, at least for the time being.

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Beneficiaries will only have the potential income tax implications to contend with, as well as the prospect of unlimited IHT protection if designated to provide a pension.

Joshua Croft is a senior technical consultant at AJ Bell

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What does the term ‘nominee’s flexi-access drawdown’ mean?

  2. Which of the following is the odd one out for authorised pension payments that can be made following the member’s death?

  3. True or false: the scheme administrator is bound to follow the wish of the scheme member in their expression of wish or nomination.

  4. What are the three separate classes of beneficiary that can receive pension income from the deceased member’s fund?

  5. True or false: if the pension member dies before the age of 75 and funds are designated to their beneficiary within two years, death benefits will be paid free of income tax.

  6. For a charity lump sum death benefit to be paid, which conditions must be satisfied?

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  • Explain the main changes introduced to pension death benefits in 2015
  • Understand who the eligible beneficiaries are
  • Understand how the taxation of death benefits work

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