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With Valentines Looming Asia Pacific Pension Pose an Interesting QuestionAsiapacificpension

With another Valentine day just around the corner, a time when we traditionally show our love for those that matter, it might be useful to look at what happens upon death with some of the various pension arrangements. Transferring your pension may mean the difference between a 100% tax free lump sum being paid to your beneficiaries rather than just 45% (after tax) from a pension left in the UK.

Currently if you die after you start to draw your company pension any pension protection or annuity protection lump sum death benefit paid following your death will be taxed at a special lump sum death benefits rate. The Income Tax rate payable is 55 per cent and will be paid by the scheme administrator. In the same way if you have a private pension where the scheme has provided for a lump sum payment this will be taxed at 55 per cent.

• Tax on a transferred (QROPS) pension

A QROPS member can be safe in the knowledge that, upon death at ANY time, his or her entire fund will be paid to the beneficiaries FREE OF ALL TAX. That means that a 100% tax-free lump sum can be paid to your spouse, partner or any other beneficiary that you wish.
When it comes to your financial planning, it is vital that you are aware of the situation you will leave behind for your loved ones, in the event of your eventual death. It can be hard to understand the impact of, for example, not making a will or perhaps not having an up to date ‘nomination of beneficiary’ form lodged with your pension providers.
One thing which is crystal clear though is that, if you fail to leave clear instructions about what will happen when you die, then those decisions will be made by others after your death. Tax on death, is a ‘lazy’ tax and can be avoided in most instances with careful and proper planning. As with all such decisions, it’s vital that you seek advice from a qualified financial advisor, so please feel free to contact us for a free and impartial assessment of your current situation.


Asia Pacific Pensions can be contacted for free impartial advice either by email at [email protected] or by telephone on either 038 074644 or 0800 178 269.

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