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Rowanmoor SIPP

Death Benefits

Member dies before taking benefits or whilst receiving income drawdown
Member dies whilst receiving scheme pension
Member dies whilst receiving an annuity

The death benefits, which can be paid when you die vary, depending on your age when you die. Death benefits will be paid to your nominated beneficiaries, who may be dependants, nominees or successors, at the discretion of the operator.

Member dies before taking benefits or whilst receiving income drawdown

If you die the total value of your SIPP and any other pension arrangements you have, will be tested against the current lifetime allowance.

Death Before Age 75

In the event of your death before age 75 your funds, up to the current lifetime allowance, can be paid, tax-free as a lump sum.

Alternatively, the whole of the fund, up to the lifetime allowance, may be used to provide beneficiaries’ pensions tax-free. Pension benefits may be taken as follows:

Death from age 75

If you die at, or after, age 75 your fund can be paid to your beneficiaries as a lump sum taxed at the recipient’s marginal rate of income tax. If the beneficiary is not an individual, for example a trust fund or a company, a 45% tax rate will apply.

Alternatively, your fund may be used to provide beneficiaries’ pensions. Any beneficiaries’ pensions will be taxed as earned income. Pension benefits may be taken as follows:

  • beneficiaries’ flexi-access drawdown;
  • beneficiaries’ scheme pension;
  • beneficiaries’ lifetime annuity

OR

If you have no dependants, the death benefits can be given to a charity, tax-free.

If an individual receiving beneficiaries’ flexi-access drawdown income dies, the same death benefits will be available for their nominated beneficiaries, known as successors. Tax treatment of payment to successors will depend on whether the first beneficiary died before reaching age 75 or not; not the age of the original member at the time of their death. If the successor dies and funds still remain available, the same options are available to their successors and tax treatment is dependent on their age at death.

Member dies whilst receiving a scheme pension

Benefits can continue to be paid to your beneficiaries, until the end of any guarantee period, subject to income tax. After any payments in the guarantee period, benefits may be taken as follows:

  • cash lump sum to your beneficiary to the maximum of the original fund less any pension payments already paid, tax-free if you die before age 75, or paid less tax at the recipient’s marginal rate of income tax from age 75;
  • dependant’s flexi-access drawdown, taxed as per the cash lump sum;
  • dependant’s scheme pension, subject to income tax;
  • dependant’s lifetime annuity, subject to income tax.

Dependant’s pensions that exceed the annual payment you were receiving from your scheme pension may be subject to an additional tax charge.

All death benefits are payable at the discretion of the scheme operator and subject to available funds.

Member dies whilst receiving an annuity

For lifetime and short-term annuities death benefits will vary and will be based upon the options selected by you when buying your annuity.

This information relates to the Rowanmoor SIPP. If you have any specific queries relating to the information provided on this page please send your questions via the enquiry box on the right hand side or email us. Alternatively please read our SIPP literature for more details.

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