Here’s some rule changes you might have missed:
- Where a pension scheme member dies aged under 75 and an annuity is purchased for the beneficiary/nominee using the member’s uncrystallised funds within two years of the date of death the annuity payments are tax-free.
- If the above happens outside two years of death the annuity payment is taxed at the beneficiary’s / nominee’ marginal rate.
- Where the same pension scheme member dies a bit later and is aged over 75 the process is similar. Any annuity purchased for the beneficiary/nominee using the member’s uncrystallised funds, are taxed at the beneficiary’s/nominee’s marginal rate.
- But it is not so favourable for final salary scheme. Any spouse’s/dependant’s pension from a final salary scheme is taxable at the dependent’s marginal rate
All of the above will be helpful when taking our Pension Freedom CPD test found on Bat under T&C Financial Exam if you haven’t already taken it!
If you employ staff advising on pensions, then you must, as supervisor get them to take the exam. Remember that thematic review coming up next January.
see our Guide to Pension freedom in http://ifac.eu/document-library and also see our letter to clients turning them down.