Key to planning here is the member can also nominate both dependents and non-dependents and a strategy can be created where a series of income payments can be made, keeping beneficiaries below their next band of higher-rate tax.
An effective strategy of dealing with death benefits could impact the member’s decision to draw retirement benefits at all, or if so at what level.
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It may be more tax efficient to live from drawing down personal assets, thus reducing an estate that may be subject to inheritance tax while leaving the pension fund intact.
Martin Tilley is director of technical services at Dentons Pension Management
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