If the plan holder dies before age 75, all payments (cash or income) will be tax free, but if death occurs after age 75, any cash or income will be taxed at the marginal rate of tax payable by the beneficiary. Purchase an annuity for selected beneficiaries, normally a spouse / partner.Arrange flexi-access drawdown for beneficiaries (no income needs to be taken).Pay the balance of the drawdown pot as a cash lump sum.Most drawdown plans offer three options following the death of the plan holder:
Investing in drawdown is very different from investing before retirement and therefore it is advisable to take professional advice, not only on the initial investment strategy but in order to have regular financial reviews to make sure the plan is on target.
A drawdown plan lets you have the normal 25% tax free cash sum and then you can take regular or ad hoc income payments directly from your pension pot.