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.
- 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 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: