Another arrangement worth reviewing is who the saver has nominated as their pension beneficiaries, and perhaps make any adjustments around the age of 75. “Pension holders may have some beneficiaries, such as grandchildren, who would be able to access funds at a lower rate of income tax and make any appropriate changes,” Henderson notes.
The two-year timeline
Although there is much emphasis on income tax being payable by a pension saver’s beneficiaries when the former reaches the age of 75, it is worth remembering that tax may also be payable if the beneficiary is paid more than two years after the provider is informed of the saver’s death, even if they were under the age of 75.
“All parties need to work together in providing and reviewing critical documentation to ensure the swift conclusion and settlement of the death claim,” says Damien Bowler, pensions technical manager at Curtis Banks.
“It is in the best interest of the beneficiaries to ensure required documents are swiftly provided to ensure the two-year deadline is met, and avoid the funds becoming taxable.”
Indeed, any uncertainty caused by an expression of wish being absent could also cause a delayed payment, underlining the importance of having a nomination in place.
Chloe Cheung is a senior features writer at FTAdviser
