Death Benefits in Income Drawdown
If death occurs before age 75, the fund passes to the clients estate in the form of a tax free lump sum, or the beneficiary has the option to stay invested in drawdown, and receive a tax free income.
The client also has the option to purchase an annuity, or scheme pension, with the proceeds.
Payment must be made within 2 years of death.
If death occurs after age 75, the lump sum paid out would incur a 45% tax charge for the current tax year 2015/16. From 2016/17 the lump sum is paid out at the beneficiaries highest marginal rate.