@magicmoneytips: What happens to your defined contribution pension when you die? 🤔 The answer depends heavily on your age when you die — and this is something many people don’t realise. If you die before age 75, your defined contribution pension can generally be passed to your beneficiaries tax-free, provided the relevant rules and allowances are met. Your beneficiaries may be able to take the money as a lump sum, leave it invested and take withdrawals, or use other options depending on the pension provider and circumstances. If you die after age 75, your beneficiaries can still inherit your pension, but withdrawals will generally be subject to income tax at their marginal rate. So, depending on their income, they could potentially pay 20%, 40% or even 45% tax on money they take from the pension. But there is another major change you need to know about. From April 2027, the government plans for most unused pension funds and death benefits to be brought within the value of your estate for Inheritance Tax purposes. This means pension planning could become even more important when considering how much wealth you ultimately pass on to your family. Your pension isn’t just about providing an income for retirement. It can also be an important part of your estate planning and wealth transfer strategy. Make sure you have an up-to-date expression of wish/nomination form and regularly review your beneficiaries. The rules surrounding pensions, death benefits, income tax and inheritance tax can be complicated, so don’t make decisions based purely on something you see on TikTok. Take professional financial advice to understand how the rules apply to your personal circumstances and your family’s future. Financial education is about knowing the rules — financial advice is about knowing what to do with them. #PensionTips #FinancialEducation #InheritanceTax #RetirementPlanning #MoneyTips

MagicMoneyTips | Kevin White

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Sunday 16 August 2026 12:18:45 GMT