There has been numerous changes announced in the pension’s system recently and some of them are about to come into force; one area of pension reforms that have gained a lot of attention is flexible pensions.
Flexible pensions will allow an individual to keep their pensions in the family so it can be inherited by their relatives. The new measures will be introduced in April and include the following options:
Wealth Transfer Vehicle
This will enable an individual to nominate someone to inherit what remains of their pension fund; the transfer of the pension fund is not limited to dependants so it can be gifted to an adult such as a grown up son or daughter.
There is also positive news when it comes to taxation. When the pension funds are inherited by a family member, there will be no requirement to pay inheritance tax, removing any concerns that a pension gifted to a relative could leave them liable to taxes.
Pass it down the Generations
Another benefit of these new changes is it allows the person that has inherited the fund to pass the pension along to someone else in the family. This means the pension can be passed along to generation to generation if you wish, and all with no inheritance tax to pay.
Not nearly enough people have taken out a pension prevision; recent statistics show that one in seven people close to retirement age still don’t have a pension plan in place. This might be due to a number of factors such as a lack of trust in pension companies, or having a limited income, however, another reason why people choose not to make provisions for the future is because of the complicated tax rules that can surround them.
With the new changes due to come into force, it should encourage people to invest in a pension safe in the knowledge it will stay in the family and won’t be subject to inheritance tax.
However, the pensions system is difficult to navigate without professional advice and in order to make sound investments for your future and that of your family, it is advisable to seek the help of an independent financial advisor who can give the expert advice you need to help secure your financial future.
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