Death Benefits Flashcards
What income tax is due on death benefits payable on a Drawdown Plan after 6 April 2015 after age 75?
45% on payments made in 2015/16. After 6 April 2016 this will change to the recipients marginal rate of income tax.
What are the 3 main benefits potentially payable when a member dies whilst in receipt of a scheme pension?
- Dependent pension
- Guarantee periods
- Pension/annuity protection lump sums
What are the 3 main benefits potentially payable when a member dies whilst in receipt of an income payable as a lifetime annuity?
Survivors annuity
Guarantee periods
Pension/annuity protection lump sum
What income tax is due on death benefits payable on a Drawdown Plan after 6 April 2015 before age 75?
Tax-free
Uncrystallised pension funds:- What are the death benefits before age 75?
The fund can be paid to any beneficiary completely tax-free as a lump sum, annuity or as a drawdown pension.
The benefits will be tested against the lifetime allowance
Uncrystallised pension funds:- What are the death benefits after age 75?
The fund can be paid out to any beneficiary as an income (annuity or drawdown) with tax being deducted at the recipient’s marginal rate.
The fund can be paid to any beneficiary as a lump sum less a 45% tax charge.
From 6 April 2016 the tax charge on lump sum payments will be at the recipient’s marginal rate of tax.
Crystallised pension funds:- What are the death benefits after age 75?
Any beneficiary can draw down on it at their marginal rate or 45% charge if paid as a lump sum (marginal rate from 2016/17)
Crystallised pension funds:- What are the death benefits before age 75?
Can pass on completely tax-free to any beneficiary as a lump sum or as a drawdown pension. A drawdown fund can be used to buy an annuity at any time.
What are the death benefits of a joint life annuity before age 75?
Any beneficiary can receive payments tax-free.
What are the death benefits of a joint life annuity after age 75?
Any beneficiary can receive payments at marginal rate
