What happens to my self-invested personal pension (SIPP) when I spend a
DID Did you know that after your death, the money left over from your personal pension (RPRS) can be passed on to your loved ones? And that she could also be exempt from inheritance tax?
As is generally the case with pensions, there are key caveats and differences, depending on the type of pension. Here are some answers to frequently asked questions.
What are the death benefits of my personal pension?
Generally, whatever remains of your personal pension can be passed on to your beneficiaries through:
1. A one-time payment to a bank account
2. A Flexi Access Drawdown Self-Invested Personal Pension Beneficiary
3. A Beneficiary Annuity
If Fidelity International administers your personal pension, see page 22 of the “Doing Business with Loyalty” booklet for more details or call our team of bereavement specialists at 0800 41 41 16.
Who decides who inherits my personal pension?
An independent board of directors. This means that the final decision as to who your pension may be paid to is not made by your estate executors, or any of your family or friends. This is a key misconception when it comes to retirement investing and something to keep in mind when getting your house in order.
How does the Independent Board of Directors decide who to pay my pension to?
To make their decision, they will consider any key information that would guide them towards a decision. Key information would include your expression of wish, will, intestate laws (guidelines if you die without a will) and any other key information. The trustees will also seek to confirm who may have been financially dependent on you at the time of your death. Fidelity has a dedicated team of bereavement specialists who are there to support your loved ones through this information-gathering process.
How often should I update my expression of wish form?
Every time you have a key lifestyle change. We recommend that you review your wish expression every 2-3 years or after any major life event, such as marriage, divorce, birth of children, buying a house, new job/raise salary or a change in your financial situation.
How do I update my wish expression?
If you have your personal retirement with Fidelity, you can update your wish expression by completing this form
Will my beneficiaries have to pay tax on my retirement death benefits?
There are two indicators that dictate whether your employer pension will be paid tax-free.
1. If you die before age 75.
2. Benefits are paid to your dependents within 2 years of notification of your death to the provident institution.
If either of the above situations does not apply, the payment to your beneficiaries will become taxable. We always suggest that you seek advice from a tax specialist as they will be able to provide you with personalized advice.
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