Introduction

The Taxation of Pensions Act 2014 made important changes to how money purchase pension funds can be dealt with following a member’s death. These changes apply to:

1. •

   funds that have been designated to flexi-access drawdown but have not been withdrawn by the date of death

2. •

   any remaining funds in capped drawdown

3. •

   funds in defined contribution schemes which are yet to be crystallised

The changes are to the tax applicable which in many cases has now been eliminated altogether.

For the first time, and again it is emphasised only relating to defined contribution schemes, persons other than ‘dependants’ are able to inherit a member’s unused funds at death. The class of potential beneficiaries is now literally unlimited. Residual funds following death may be paid out in lump sum form or may be used as flexi-access drawdown funds on the part of the recipient. These changes apply where the first payment to the beneficiary (or beneficiaries) involved is on or after 6 April