Three Tips For Passing Your Pension Onto Your Loved Ones

Do you consider your pension an asset in the same way that you think about assets like property, bank accounts, cars, and investments?  Your pension is another valuable asset.

That’s why planning for what happens to your money when you die should include planning for what happens to your pension along with any other assets that you have.

1. Find out what type of pension you have and the death benefits your pension provides

Pension rules and regulations can be complex. When considering what you want to happen with your pension when you die, you need to know what type of pension you have and the pension rules for what happens on your death.

Some pensions have automatic rules for what happens on death. For example, they will provide an income to a dependant (such as your spouse) on your death. Other pension arrangements may have more flexibility on who you can leave your pension to and how they can access it.

2. Complete a death benefit nomination form

For pensions that let you choose who you can leave your money to, you can complete a death benefit nomination form (also called an expression of wish).  This lets your pension provider know who you want to leave your money to.

Completing a nomination form is important. If your loved ones aren’t on the form, they may not be able to keep the money in a pension, which offers tax advantages. Instead, they may simply receive a lump sum.

Knowing what the pension scheme can offer can help guide how you write your death benefit nomination form. Or perhaps you may wish to consider an alternative pension that can provide the options you want for your beneficiaries.

3. Know what tax may be due

There can be income tax considerations for your beneficiaries when they receive your pension and this will depend on what age you are when you die.  Further to this, while pensions are currently free from inheritance tax, there can be instances where this will apply.

Your pension is likely to be one of your most valuable assets and can provide much needed capital or income for your loved ones.

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Nelsons Investment Management team is here to help you understand the rules of your particular pension. We can look at what actions you can take to reduce any negative impacts on your family and to ensure your loved ones receive your pension benefits in a tax efficient manner.