Pensions and inheritance
Posted: August 24th, 2023, 11:12 pm
Currently I am drawing an amount from my SIPP (which is in drawdown) equal to my personal allowance and therefore effectively tax free. Eventually when I get to 65 I have a final salary pension starting and sometime, a bit later, the state pension. My plan is thereafter to leave my SIPP untouched, to accumulate, so it can be transfered to my sons on my death. Assuming I die after the age 75 they will pay tax on it as they draw it (as I would have done).
However my question is; can they take a 25% tax free lump sum? (When I put the SIPP into drawdown I took the 25% tax free lump sum).
If not, surely I'm better to gradually draw down the pension, after 65, paying the tax and giving it to them so they can contribute it to their own SIPP, recovering the tax in the process? That would allow them to at least be able to tax a 25% tax free lum sum when they retire.
Yes, I'm aware of the 7 year IHT rule and exemptions.
However my question is; can they take a 25% tax free lump sum? (When I put the SIPP into drawdown I took the 25% tax free lump sum).
If not, surely I'm better to gradually draw down the pension, after 65, paying the tax and giving it to them so they can contribute it to their own SIPP, recovering the tax in the process? That would allow them to at least be able to tax a 25% tax free lum sum when they retire.
Yes, I'm aware of the 7 year IHT rule and exemptions.