Death benefits from a defined contributions pension scheme (from 6 April 2015)

Produced by in association with John Hayward

Employment Tax

Guidance

STOP PRESS: This guidance note may be affected by the changes to the taxation of pensions made by FA 2024, Sch 9 from 6 April 2024 onwards. The commentary below covers the rules that apply prior to that date. Before continuing your research, see the Abolition of the lifetime allowance guidance note.

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:

•
funds that have been designated to flexi-access drawdown but have not been withdrawn by the date of death
•
any remaining funds in capped drawdown
•
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

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