Pension now set up, do I still need a financial adviser?

[mikebeaches]

Now this came as a shock as the MIL‘s IFA hadn’t warned of this (and it may be the case that there isn’t an actual liability to tax). We’ve asked him to check on this liability before requesting the payment out. This thread suggests it may be the liability that arises on beneficiaries if the death happens after age 75 where there is a lumps sum remaining. The rough division would be £100k to each beneficiary. Are there any reliefs available to the beneficiaries (or indeed to the MIL) to set-off against this £100k?

Unlike Otter Spotter I don't have the benefit of any professional financial background.

As I understand, beneficiaries ordinarily have an income tax liability on inherited pension funds, where the deceased is over the age of 75.

However, I believe there is a potential way to avoid any tax at the point of inheritance - and that is for the funds to be placed directly into the pension fund of the recipient. So for example, if Mrs Ingwe, instead of banking her £100k inheritance from her Mother's pension fund, she arranged for the money to be transferred directly to her own pension pot (assuming she has one, or otherwise sets one up), then the possibility of tax liability only arises when/if she eventually draws her own pension? And if her drawings and other income remained below the £12,500 annual allowance, then there wouldn't be an income tax liability?

I'd be grateful for Otter Spotter s view on that scenario.

 

[Ingwe]

Thanks for all the helpful advice/suggestions. I really don‘t want/didn’t intend to ‘highjack’ someone else’s thread. Have lots to think about and, I should also correct here, my initial misunderstanding. The sum concerned is not a pension pot sum. It is a non-qualifying life assurance bond and I’m currently looking at HMRC’s guidance on how the tax, if any, is calculated in the relevant circumstances. Cheers.

 

[mikebeaches]

Thanks for all the helpful advice/suggestions. I really don‘t want/didn’t intend to ‘highjack’ someone else’s thread. Have lots to think about and, I should also correct here, my initial misunderstanding. The sum concerned is not a pension pot sum. It is a non-qualifying life assurance bond and I’m currently looking at HMRC’s guidance on how the tax, if any, is calculated in the relevant circumstances. Cheers.

Ah, OK - perhaps an assumption on my part that it was the balance of a pension fund - apologies.

However, I'd still be interested in Otter Spotter's view of the scenario I highlighted. ie transferring pension fund balance following death, to recipient's own pension fund.

 

[Ingwe]

Ah, OK - perhaps an assumption on my part that it was the balance of a pension fund - apologies.

However, I'd still be interested in Otter Spotter's view of the scenario I highlighted. ie transferring pension fund balance following death, to recipient's own pension fund.

mikebeaches- no apologies necessary so far as I’m concerned. I gave the wrong facts earlier when talking about pension pot.

 

[Otter Spotter]

If that doesn’t indicate the value of an IFA, nothing will!



I trust that you meant



Ian

Correct, so, personal pension can be paid out as lump sum to any beneficiary, who doesn’t have to be a relative or dependent, but once it’s in that persons estate, then when they die, it will be classed as part of their estate the their IHT calcs. So there is always advice needed at the time of the pension members death around whether the beneficiary’s take the pension fund as a lump sum or whether they have it transferred as pension in their name then it can be used to provide a taxable income (20% income tax as apprised to 40% IHT) and potentially cascaded down the family tree without IHT being charged at some point.

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[Otter Spotter]

Ah, OK - perhaps an assumption on my part that it was the balance of a pension fund - apologies.

However, I'd still be interested in Otter Spotter's view of the scenario I highlighted. ie transferring pension fund balance following death, to recipient's own pension fund.

Hi Mike, please see my previous post 65 which I hope assists

 

[BouncyBoatFolk]

Thank you for all the replies and suggestions. Just before I retired, at the state pensionable age, my IFA put my various private pensions together and opened a draw down account with the Prudential and of course charged me accordingly. I have now been drawing down for five years and, like others, my pot has actually increased by five thousand. I assume the Prudential are doing all the market chasing now so wonder if I now need the IFA. I know it was mandatory when setting up the pension but wonder am I wasting my money now.

Just transferred my pension away from Pru after 30 dire years of under performance from setting the pension till I got exasperated and took it away.
It's now with on of the robo investors [ Nutmeg] It's grown more in a few months than Pru managed in the last couple of years. I also get regular phone calls with advice and asking if I have any questions or issues. They were also able link all my other investments with them together and reduce my fees considerable. Happy camper here, well except for last [ Bl@@dy Friday] , but that was an across the board market downturn due to the new flavour of covid being announced.
Mike

 

[Otter Spotter]

Just transferred my pension away from Pru after 30 dire years of under performance from setting the pension till I got exasperated and took it away.
It's now with on of the robo investors [ Nutmeg] It's grown more in a few months than Pru managed in the last couple of years. I also get regular phone calls with advice and asking if I have any questions or issues. They were also able link all my other investments with them together and reduce my fees considerable. Happy camper here, well except for last [ Bl@@dy Friday] , but that was an across the board market downturn due to the new flavour of covid being announced.
Mike

You probably had an old style with profit pension plan (not a drawdown) which only had low bonuses added each year, and in some years no bonus at all. Only Pru made money on those schemes, unless you got to retirement where the plan may have offered a guaranteed annuity income much higher than you could by purchasing on the open market.

 

[BouncyBoatFolk]

You probably had an old style with profit pension plan (not a drawdown) which only had low bonuses added each year, and in some years no bonus at all. Only Pru made money on those schemes, unless you got to retirement where the plan may have offered a guaranteed annuity income much higher than you could by purchasing on the open market.

Yes, and when it matured they kindly charged me 2% for placing it another scheme, that they were equally able to make money in fees from, but little actually went into my pot, hence telling them they could do one.
The money invested with Nutmeg is safe as they only manage the money, they don't actually hold onto it.
I did also try Vanguard for a while, but they were very poorly performing.
Mike.

 

[Otter Spotter]

Yes, and when it matured they kindly charged me 2% for placing it another scheme, that they were equally able to make money in fees from, but little actually went into my pot, hence telling them they could do one.
The money invested with Nutmeg is safe as they only manage the money, they don't actually hold onto it.
I did also try Vanguard for a while, but they were very poorly performing.
Mike.

The Man from the Pru had a lot to answer for , don’t set me off on that rant

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[mikebeaches]

Hi Mike, please see my previous post 65 which I hope assists

Many thanks - much appreciated!