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The Pension Drawdown Company specialises
in providing advice on all aspects of pension
drawdown and investments

 
 
10 March 2010

How Safe Is Your Pension

Defined Benefit, or Final Salary Schemes, in the UK have a collective deficit of £253 billion as at the end of March. This is reported by the government sp…

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Independent Financial Adviser Logo The Personal Finance Society

Death Benefits in Alternatively Secured Pension (ASP)

If you are in an Alternatively Secured Pension at the time of your death (i.e. after 75) the rules that govern the fund remaining in the plan are somewhat complicated. A summary of the main points are:-

  • If surviving spouse is under age 75 they will be entitled to the fund and have the option of buying an annuity or enter into their own Unsecured Income plan when the income levels would be set in accordance with their age at that time. Alternatively they could purchase an annuity.
  • If surviving spouse is over age 75 the alternatives are to continue in ASP or to buy an annuity.
  • If there is no surviving spouse the remaining fund can be paid to anyone nominated by you, but this will be treated as an unauthorised payment by the Inland Revenue and will be subject to a cumulative tax charge of up to 82% of the fund value.
  • If a member dies in ASP with no dependents, the remaining fund can be used to pay a Charity Lump Sum Death Benefit (CLSDB) to any charity nominated to the deceased member. If no nomination has been made the scheme administrator can make a CLSDB nomination. The CLSDB is paid tax-free to the nominated charity.
  • Some death benefits paid from an ASP fund may be assessed for Inheritance Tax.

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