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Beneficiary flexi-access drawdown

Beneficiary flexi-access drawdown (BFAD) allows individuals to pass on pension benefits in a manner where the beneficiaries have immediate access to the funds after death, while retaining some of the main advantages of being within a pension arrangement. This includes tax-free growth and favourable IHT treatment. 

The rules for who can receive pension funds as a BFAD arrangement are quite complex though. Additionally, the option to “nominate” non-dependants means that expression of wish forms need to be regularly reviewed and updated where required.

 

Please note that the UK Government has announced that from April 2027 unused pensions will be included in the calculation of the value of estates for Inheritance tax purposes and could therefore be subject to Inheritance Tax. Please visit Inheritance Tax changes for more information.

Our flowchart provides a simple analysis of the underlying law and the evaluation to follow for each potential beneficiary.

Topics include: Income tax treatment of benefits paid following the death of the member under age 75; Income tax treatment on death age 75 and over Charity lump sum death benefits.

Topics include: Death in service, in deferment or in retirement; Potential beneficiaries; Taxation – member’s death before age 75; Pension freedom rules.

A client-friendly guide explaining the importance of completing an expression of wish.

Replacement of the lifetime allowance

The new rules and what they mean for clients.

Bereavement and planning ahead

Here you’ll find all the information you need in relation to administering an account following the death of a client.

Questions or feedback

Although the information provided in this package is fairly comprehensive, it may not answer all your questions. While we can’t undertake to respond to you individually, we’d like to hear your feedback to help develop material that best assists you.

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