Under the current income drawdown rules if you take you tax free cash and invest your remaining fund in an income drawdown plan and subsequently die before age 75, then your fund can be passed on to your estate with a tax charge of 35%.
The new coalition government are reviewing pension legislation and one of the things being considered is a tax charge increase from 35% to 55%. This will affect anyone in income drawdown or unsecured pension who dies before age 75. This does seem an incredible move and a heavy price to pay for those people who do not annuitise to give themselves greater flexibility in retirement.
Those who can afford not to take their pension fund can still pass money on tax free – this could be considered as very efficient life insurance?
Income Drawdown Calculator
You should use an income drawdown calculator to work out how much income you can take compared to annuity purchase.
Take Income Drawdown Advice
As with all these types of complicated contracts you should always consider taking independent financial advice from someone who can take you through the advantages and disadvantages and implications to you and your estate.
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