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Death Benefits

If your client dies, the value of their Retirement Account can be used to provide benefits, as follows:

 

If they die before 75:

  • Lump sum - any beneficiary can take the value of the fund as a tax-free lump sum
  • Flexible Access Drawdown - any beneficiary can take the value of the fund through income drawdown. The income will be tax-free
  • Annuity - any beneficiary can buy an annuity to provide a tax-free income.

If they die on or after age 75:

  • Lump sum - any beneficiary can take the value of the fund as a lump sum, taxed at their marginal rate of income tax
  • Flexible Access Drawdown - any beneficiary can take the value of the fund through income drawdown. The income will normally be taxed at their marginal rate of income tax
  • Annuity - any beneficiary can buy an annuity. The income will normally be taxed at their marginal rate of income tax.

A beneficiary could be a dependant, a nominee or a successor

  • a dependant is someone who is a spouse, civil partner, or financially dependent on your client
  • a nominee can be any other person that your client chooses to nominate, even if they are not dependent on them, and can also be a charity
  • the beneficiary can pass on any unused drawdown funds on their death to their own beneficiary, known as a successor.

Please note:

  • Where the lump sum option is applicable, there is no tax charge if it’s paid to a charity
  • If the Retirement Account is arranged under trust, we’ll pay the benefits to the trustees
  • No Inheritance Tax will normally be payable on the value of the Account because we will choose the beneficiary, taking into account any nomination your client makes
  • Some investments may take longer to sell than others, and we may therefore pay the death benefit in stages
  • A beneficiary can transfer the remaining value to another provider and take income drawdown or buy an annuity on the open market.

Accidental Death Benefit – Retirement Planning only

If your client dies as a direct result of an accident before the Account has been running for 5 years, the amount we will pay will be the greater of 120% of the total payments received into Retirement Planning, or the value of the investments within Retirement Planning on the date we receive notification of death. No charge is made for this.

Tax

  • Tax treatment depends on the individual circumstances of your client. Tax rules and your client’s circumstances may change in the future
  • Tax charges will normally apply if the Government’s ‘Annual Allowance’, ‘Tapered Annual Allowance’, ‘Money Purchase Annual Allowance’ or ‘Lifetime Allowance’ is exceeded.

For more details, see:

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Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.

Scottish Widows Unit Trust Managers Limited. Registered in England and Wales No. 1629925. Registered Office in the United Kingdom at Charlton Place, Andover, Hampshire SP10 1RE. Tel: 0345 300 2244. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 122129.

HBOS Investment Fund Managers Limited, registered in England number 941082. Registered office in the United Kingdom at Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 119223.

Scottish Widows Bank is a trading name of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales, no. 2065. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278.

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