Death benefits Flashcards
What are normal flexible death benefits for a pension?
Lump sum of fund
Nominee’s flex-access drawdown
Nominee’s annuity
How much is the standard LSDBA?
The LSDBA is set at £1,073,100
Most pensions are tested against the LSDBA
Pension death benefits post 75
All taxed at beneficiaries rate of income tax under all options
Pension death benefits - how is nominee FAD or Annuity taxed pre and post 75?
Pre 75 - all tax free
Post 75 - Taxed at beneficiaries rate of income tax
Why is expression of wish on a pension important?
So the trustees know who to pay funds to.
If there is no nomination Lump Sum will be paid out, no option of FAD/Annuity. This could result in immediate unnecessary income tax bill
Can those with transitional or enhanced protection claim a higher LSDBA?
Yes - 25% of the member’s lifetime allowance is available.
Which lump sums count towards LSDBA?
PCLS
Tax free element of UFPLS
Stand-alone lump sums
Serious ill health lump sums
Lump sum death benefits
If a member has Individual Protection 2016 how much LSDBA do they have?
Lower of
£1.25 million
The value of benefits on 5 April 2016
If a member has Fixed Protection 2016 how much LSDBA do they have?
£1.25 million
If a member has Fixed Protection 2014 how much LSDBA do they have?
£1.5 million
If a member has Primary Protection how much LSDBA do they have?
£1.8 million + (£1.8m x primary protection factor)
If a member has individual Protection 2014 how much LSDBA do they have?
The lower of
£1.5 million
The value of benefits on 5 April 2014
If a member has Fixed Protection 2012 how much LSDBA do they have?
£1.8 million
If a member has Enhanced Protection how much LSDBA do they have?
The value of uncrystallised funds on 5 April 2024
