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Legacy planning with a SIPP
Why your pension is a great place to start when thinking about what to leave your loved ones.
Important information - The value of investments can go down as well as up so you may not get back what you invest. Tax treatment depends of individual circumstances and all tax rules may change in the future. The minimum age you can normally access your pension savings is currently 55 (57 from 2028). It’s important to understand that pension transfers are a complex area and may not be suitable for everyone.
Legacy planning at a glance
In this section, we take a much closer look at your pension and how your loved ones can benefit from it when you're no longer around.
Pensions can be a great way to leave something to those closest to you, as they often sit outside your estate, which means they won’t normally count towards your £325,000 inheritance tax allowance (£650,000 for married couples or civil partnerships).
If you have saved into your pension plan you have a number of options to consider when deciding how much to leave your loved ones. We’ve highlighted these below:
Leave it invested
If you don't need your pension to provide you with an income you can leave it invested. However, depending on how old you are when you die your family may have to pay tax on any money they withdraw after your death.
Take regular income or lump sums
If you decide to withdraw money from your pension regularly or in lump sums, whatever remains when you die can still be left to your family.
What this means for the tax they will pay
If you die before the age of 75
- Anything left in your pension can be paid to your beneficiaries
- This could be paid as a lump sum or they can take regular withdrawals
- Generally, in either case it will be tax free (as long as it doesn’t go over your lifetime allowance*)
If you die after the age of 75
- Anything left in your pension can be paid to your beneficiaries
- This could be paid as a lump sum or they can take regular withdrawals
- Any lump sum or withdrawals paid out will be subject to tax based on the individual tax position of the beneficiary
* Lifetime allowance rates may change and some individuals may have protection giving them a higher personalised lifetime allowance.
Things to consider
There are a number of factors that may affect how much you are able to leave to your loved ones.
You should also consider updating your 'Expression of Wish' form if you haven't looked at it for a while. Generally this should be done every 3 years to help the scheme administrators determine who to pay your pension benefits to if you die.
For your 'estate' (your property, money and possessions) to be distributed when you die, an application for the legal right to deal with your estate will need to be made to the local Probate Registry.
Family homes and inheritance tax
In addition to the existing £325,000 nil rate band, known as NRB, a dedicated main residence nil rate band, known as RNRB, is intended to protect the family home from Inheritance Tax. This applies if a home has been left to children (including adopted, foster or stepchildren) or grandchildren (family homes are transferred to spouses and civil partners tax-free). In addition, if your estate is worth less than your threshold when you die and you're married or in a civil partnership, any unused threshold can be added to your partner’s threshold. This means the tax-free threshold for the surviving spouse could be as much as £1 million.
The RNRB threshold amount for the 2022/23 tax year is £175,000.
The RNRB may also be available to you if you’ve downsized or sold your home on or after 8 July 2015. This allows assets of an equivalent value to be passed on to your direct descendants.
For estates with a net value of over £2m, the RNRB will be withdrawn at a rate of £1 for every £2 over the £2m threshold.
Growing your wealth and passing it on
Your pension is just one way of passing on your wealth. It's good to understand what else is involved so that you can take comfort in the fact that you're doing all you can now, for when you're no longer here. There's more about this in our 'passing on wealth' section.

We can help
Transferring a pension is a big decision, so you should seek advice first. We offer advice that’s in your best interests, even if it means recommending that you leave your money where it is.
Call us on 0800 368 6882, Monday to Friday, 9am - 5pm.
Fidelity's retirement servicePension Wise
The Government offers a free and impartial guidance service to help you understand your options at retirement. This is available via the web, telephone or face-to-face through the Pension Wise service which is now part of MoneyHelper; the easy way to get free help for all your pension and money choices. You can find out more by going to moneyhelper.org.uk or call them on 0800 138 3944.
Visit moneyhelper.org.uk
Passing on your wealth
No one likes to think about what will happen to their pension when they die. As your pension often sits outside your estate and, therefore, your will it's important to think about what happens to your pension when you die. You can find out more about the 'expression of wish form' and how your loved ones will receive monies in our 'What happens to my pension when I die? video.
Transcript - What happens to my pension when I die?
It's not the happiest of thoughts but it's important to think about how we'll pass on our wealth when we're no longer here.
Usually, you do this through your will. However, your pension often sits outside your estate and, therefore, your will. This means your pension won't usually count towards your inheritance tax allowance.
It's generally the trustees of the pension scheme who make the decisions about what happens to your pension after your death. That's why it's essential to let them know what you'd like to do with your pension savings.
That said, they don't have to carry out your wishes. Completing an expression of wish form for your trustees is the best way to let them know what you'd like to do with your pension savings. And make sure you keep the form up-to-date to include any changes you'd like to make.
So exactly how will your loved ones receive your pension monies? This depends on your age. If you pass away before the age of 75, anything left in your pension can be paid to your beneficiaries as a lump sum or through regular withdrawals.
Generally, in either case, it will be tax free as long as it doesn't exceed your lifetime allowance. If you die after the age of 75, pension monies can be paid to beneficiaries as a lump sum or through regular withdrawals.
Either way, monies are taxable based on their individual tax position. So, that's what happens your pension when you're no longer here. And how to direct the monies to your loved ones.
Thanks for watching.
Important information: This information is not a personal recommendation for any particular product, service or course of action. It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances we strongly recommend that you seek advice from Fidelity Retirement Services on 0800 368 6882 or refer to an authorised financial adviser of your choice.
Thankfully it’s a bit easier to control your pensions
Bring them together with Fidelity’s Self Invested Personal Pension (SIPP).
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
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