How to get the most out of pension tax advantages
By Cristian Angeloni, 3 Feb 22
Personal finance experts share 10 tips savers should be aware of
“Pensions are an important part of tax and inheritance planning,” Lowery said.
“If you die before age 75, your fund can be passed on to your beneficiary tax-free, while if you die after 75, it is taxed in the same way as income when your beneficiary draws an income. Furthermore, if your beneficiary dies before age 75 they too can pass on any untouched funds tax-free – even if you died after age 75.
“Therefore, it’s essential that you arrange for your pension to go where you want it to – particularly as this can change according to your family circumstances.
Higham added: “If no death benefit nomination is completed, then your beneficiaries would only be able to receive your pension benefits as a lump sum.
“This can lead to quite a significant tax charge for your loved ones if anything happens to you after age 75. By completing a nomination form, your loved ones will have options to take the pension to ensure this is taken as tax efficiently as possible, based on their circumstances at the time.
“Nominating a pension beneficiary is usually something that can be done in a matter of seconds online and can result in a massive tax saving for your loved ones.”
Tags: Pension
