Tom Selby: What happens to your pension when you die? Now I know it might sound a bit morbid, but it makes sense to think about your money, where your money will go when you’re gone, and that includes your retirement pot. Different types of annuities are treated in different ways in the event of death. So let’s go through each in turn and we’ll start with the state pension. The flat-rate state pension which pays a maximum of £ 179.60 per week in 2021-2022 cannot be inherited, so it is yours and yours alone. Those who reached state retirement age before 2016 may, however, have been able to inherit the state pension from their spouse.
Now let’s move on to defined contribution pensions. If you have a defined contribution pension, your retirement pot will be invested in things like stocks, stocks, and bonds. Defined contribution pensions which have not been received or which have been drawn. So the draw is where you withdraw income while your retirement pot is invested can be passed on to whoever you want. They are generally not subject to inheritance tax and can be paid tax free if you die before age 75. If you die after age 75, they will be taxed the same as income, when you are named the beneficiary. money.
Now let’s move on to defined benefit pension plans, which a lot of people will have. Defined benefit pensions are pensions paid by your employer and are based on the number of years you have worked, so that you will get guaranteed income on a specified retirement day. Usually, defined benefit pensions come with a spousal pension and that could be income somewhere in the region of 50% of the income you would have received from that plan.
Finally turn to the annuity this is where you buy guaranteed income from an insurance company. If you have purchased a single life annuity, it is likely that your spouse or partner will not receive money from this product. If you have purchased a reversible life annuity, your spouse, your partner, your designated beneficiary should receive part of your income upon your death.