The Chancellor of the Exchequer in his pre budget statement published draft legislation that would bring surplus funds left on death whilst in a scheme pension in line with surplus funds in Alternatively Secured Pensions.David Seaton, director of consultancy at Rowanmoor Pensions, says: “In spite of further amendments to the pension’s legislation, scheme pensions remain the most appropriate method of drawing a pension post age 75. It is clear under these rules it is not tax efficient to die leaving any pension fund after age 75.
Advisers need to help clients who have large funds understand they should seek to withdraw a maximum amount from the pension even if they do not need that income. It will be better to gift it to a trust, or even a life assurance policy written in trust than leave subject to the penal inheritance tax and unauthorised payment charges. Such a gift should be exempt from inheritance tax.”
