Pensions are notoriously complex and different rules can apply to different pensions held by different companies.
After someone’s death, the benefit of their pension may be payable to the person they nominated when the scheme was set up.
Workplace and private pensions
Sometimes a workplace or private pension scheme will provide a lump sum and/or income to your beneficiaries after you die. This will be paid to the nominated person, but it is possible for a dependant to make a claim on the funds if they have been excluded.
When you reach retirement age, you may choose to remove a lump sum of 25 percent of the value of the fund from your pension. If this is still in your estate at the time of your death, then Inheritance Tax may be payable on it, depending on the size of your estate.
You can gift this during your lifetime if you choose, but if you were to die within seven years of making a cash gift, then all or part of its value will be taken into account when Inheritance Tax is calculated.
Leaving pension funds to a beneficiary
Where a joint annuity is held, payments, usually to a spouse or partner, can continue after the death of the pension holder.
If the pension guaranteed annuity payments for a certain period of time, then these will continue to be made to a beneficiary for that period of time.
The pension may entitle beneficiaries to receive a lump sum payment. If the deceased left children under the age of 18 or a dependent partner or relative, then the pension trustees may make the decision to award a payment to them.
Payment of Inheritance Tax
Pension funds are paid at the discretion of the pension trustees and do not usually form part of the deceased’s estate, in which case Inheritance Tax is not payable on their value.
However if the pension trustees are not able to make a decision as to who the pension funds should be paid to, they may make the payment into the estate, in which case the money would be included in the Inheritance Tax calculation.
Following someone’s death, you should speak to their pension provider to find out how and to whom any payments will be made.
Because pensions are such a complex area, it is advisable to take independent advice when writing a Will, dealing with pension funds or administering an estate.
If you would like to discuss your Will or a probate matter with one of our expert team, ring us on 01243 216900 or email us at firstname.lastname@example.org.
When you lose someone you love it is always a difficult time. Having to deal with the paperwork involved in administering an estate after a death – and when you’re grieving – can be extremely upsetting.
That’s why at legalmatters we will always try to make the process as pain-free as possible for you – and why we’re always delighted to hear from a client when we’ve helped a family or an individual through such a stressful time. So thank you Jane for your kind words.
“Thank you and Megan, and all in the office staff for making my journey – sorting my dad’s estate through yourself and legalmatters – a professional, reassuring and stress free time. It’s been a pleasure and I would highly recommend you to friends.”
A house is far more than simply a home. It’s also an enormously valuable asset, which can help you meet the costs of retirement.
In truth, most of us aren’t saving enough to cover our retirement needs. A recent study by Prudential found that more than half of those planning to retire this year will work beyond state pension age, with many pointing to a lack of money as the motivating factor. Around 1 in 12 said they simply could not afford to retire before they reach the age of 70.
However, the value tied up in our properties represents a potential answer for some with insufficient savings. According to Key Retirement, the property owned by the over-65s is worth a massive £1.054 trillion. So how can people tap into that money?
One answer is to downsize to a smaller property. These will usually be substantially cheaper, meaning that you can move into a property which is less difficult to manage and bank thousands of pounds to supplement your pension.
If you don’t want to leave your property, perhaps because of sentimental reasons or because it is close to family, then looking to remortgage may be an option. However, some lenders are less than eager to lend to people in their later years, so it may not be possible. Your chances of successfully remortgaging will depend on your individual circumstances.
An increasingly popular option is equity release, where you essentially unlock some of the equity you have built up in your property. Interest in equity release is at record levels and in the first half of 2017, retired homeowners cashed in £1.25 billion of housing wealth, according to Key Retirement. While these products are more expensive than remortgaging, they provide a useful alternative and should allow you to leave some form of inheritance for your loved ones after you pass away.
Interested to see how your property can supplement your retirement or be left to your loved ones after you’re gone? Speak to us today on 01243 216900 or email us at email@example.com.
When the UK made the decision to depart the European Union last year, the actual departure seemed a long way off. Although the thought of leaving loomed, the process of exiting was thought of as distant – simply another thing for politicians to worry about.
As we begin to enter the negotiations, however, it seems that the ‘keep calm and carry on’ attitude is faltering, especially among retirees.
According to recent research, 14% of those who have retired are worried about the impact of Brexit on their pension, with 19% saying they are now much more likely to seek financial advice.
Although market volatility was almost certain in the initial aftermath of the referendum, most believed that the markets would calm after the storm. However, retirees believe that the clouds haven’t cleared just yet; over one in four predict that any negative impact on their pension will be for the long-term.
It’s obvious that people are worried about the consequences of leaving the EU, but some have gone further than just expressing their concern. Due to Brexit anxieties, just over one in ten of those who had made plans to retire in 2017 have actively postponed their retirement, with 6% even changing the country that they planned on retiring to.
Having looked at these figures, you might be under the impression that just about everyone is worried about the impact of Brexit on their pension. It is though important to balance the numbers of those who are concerned, against those who are less so. In fact, the figures show the majority of people (67%) felt their retirement plans had not been affected by Brexit at all. One in eight even thought that leaving the EU would impact their pensions in a positive way.
Retirement expert at Prudential, Kirsty Anderson, commented on the concerns of retirees, as well as the importance of seeking advice:
“As you would expect, for many people who have been planning and saving for their retirement for most of their working lives, even the biggest of political upheavals won’t make a difference to their long-term plans. But with one in three new retirees telling us that their retirement plans have been affected by the referendum result, it is clear that uncertainty is having an impact for some.”
Although worrying is a natural reaction to being unsure about something, it’s rarely helpful. Rather than providing an answer, it just allows the concern to escalate and often causes us to worry even more. It might be impossible to know how Brexit will affect you exactly, but adequate planning will at least make your financial future a little more certain.
As well as guiding you through the process, talking to an expert at legalmatters can help clear up any concerns you may have. Be more certain about your future by speaking to one of our professional team today – call us on 01243 216900 or email us at firstname.lastname@example.org.