Grandmother and granddaughter

Enjoy tax freedoms through generations

One of the key benefits since the introduction of the Pension Freedom rules in 2015, is the ability of accumulated pension wealth to cascade down through generations, whilst continuing to enjoy the tax freedoms that the pension wrapper provides.

What does a ‘pension wrapper’ offer?

For example, you can bequeath your pension benefits in the event of your death.

This means that you can nominate your children to benefit from your pension.

All you need to do is complete a ‘nomination or expression of wishes’ form with your pension.

The nomination section of the form ensures that the widest possible range of people are eligible to receive payments in the form of a pension, rather than being restricted to receiving them as a lump sum.

In most cases, your pension funds are held outside of your estate and will not be covered by your will. In many cases, after your home, this could be your largest asset and with the introduction of pension freedoms, you are able to nominate to whom the money goes.

Expression or nomination of wish form

Sorting out your pension beneficiaries is even easier than making a will. No solicitor needs to be involved. All you need to do is complete an “expression of wish” form that you can obtain from your pension provider or via your financial advisor if you use one. This will state who you would like to receive your pension benefits if you die.  Remember, this doesn’t have to be your spouse or children; you could skip generations and pass onto grandchildren, or anyone else you choose to benefit.

Maximise the tax efficiency of your pension

Your pension is the most tax-efficient savings vehicle that you can use, so it is important to maximise its potential. Once a pension comes out of an estate and is paid to the beneficiary the tax benefits are lost. It does not need to pay out if the nomination is established correctly and the tax benefits retained. 

Pensions are a complex area and an independent financial advisor is ideally placed to provide information and advice on the best route to take.

For more information contact Becky Hammonds on 07969 269677 or email becky@willowfs.co.uk 

 

By Published On: 15 July 2020Categories: Advice, Investment, Wealth0 CommentsTags: ,