Did you know, your pension isn’t just a retirement savings pot? It’s also an effective tool to help support future generations. In addition to ensuring your financial certainty when you finish working, defined contribution pensions are a tax-efficient way of passing on your wealth.
Pensions can sit outside your estate for IHT purposes, so the money within your defined contribution pension can be passed onto your loved ones without incurring any IHT.
Alleviate some financial pressures
With financial pressures mounting for many people, you might consider a tax-efficient gift of a pension worth passing on to your children perhaps. Your loved ones will usually inherit the pension itself rather than the money inside it, meaning they can continue to benefit from the tax advantages, including tax-free investment growth.
As another option, you may wish to consider starting a pension plan, within limits, for a child, rather than (or in addition to) leaving them yours. Looking further ahead your children might even pass the pension onto their children, still without paying a penny of IHT if current rules still apply.
Passing a pension on might not be the right choice for everyone, there’s plenty to consider.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.
Tax planning is not regulated by the financial conduct authority.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 16/07/2024
