Even if a pension holder keeps their paperwork up to date, they must be very careful when it comes to how their savings are handled after their death, as the new pension freedoms mean the money could end up in the hands of someone entirely unexpected.
“From 6 April, the new pension freedoms will allow the whole of a child's pension to be taken in one go, so people will have to be careful,” says Mike Morrison, Head of Platform Marketing, AJ Bell. “Funds designated to a child can be taken as one lump sum payment so there is a risk that an unscrupulous legal guardian will be tempted by a large fund and then scoop the whole lot, something they would not have been able to do under the old pensions regime.”
Notes for Editors
- AJ Bell has prepared a number of case studies and articles relating to specific issues raised by the pension and death tax rule changes. These are available on request.
- Since the Budget of March 2014, the Government has outlined a series of pension reforms which will come into force from 6 April 2015.
- It has always been possible for death benefits to be paid in the form of a pension to your dependent child but the rules have limited the amount that could be taken out each year, to ensure the pension fund saw them through their education.