What happens to your pension when you die?

Your pension may become one of the most valuable assets that you own

Understanding how your pension may be realised by your dependents in the event of untimely death is a key part of financial planning.

Here is a quick guide to assist you .

Personal Pension

Payment Value of personal pension fund + sum assured under Personal Pension term assurance (if any) is payable as a lump sum. No limit on amount. On death paid to the estate of the policyholder.

PRSA

Payment Value of PRSA fund is payable as a lump sum. No limit on amount. On death paid to the estate of the PRSA owner.

AVC PRSA

Payment Linked to payments from main pension scheme. Main scheme death benefits are restricted to 4 times Final Remuneration, however, AVC PRSA proceeds can be paid as a lump sum because they relate to the fund value of personal contributions. On death paid to the estate of the AVC PRSA owner.

AMRF/ ARF Fund

In the event of your death, your ARF/AMRF becomes an asset of your Estate and will therefore be subject to the terms of your Will.

If you should you die without leaving a valid Will, it will be dealt with in accordance with the intestacy provisions of the Succession Act 1965.A transfer of ARF/AMRF assets after your death is taxed as follows (as at June 2016):

ARF/AMRF inherited by Income tax due Capital Acquisitions Tax ('CAT') due Surviving spouse None where transferred into an ARF of the surviving spouse. Yes, if not transferred to ARF of survivor's spouse. This will be treated as a taxable distribution by the deceased in his/her year of death. None Child aged 21+ at date of your death Yes. Income tax at a rate of 30% Child aged less than 21 at date of your death. Yes. Normal inheritance tax rules will apply. Stranger in blood (anyone else not being your surviving spouse or children) Yes. This will be treated as a taxable distribution by the deceased in his/her year of death. Yes. Normal inheritance tax rules will apply.

Active Member of Pension Scheme

Payment Active Pension Scheme Member. Value of fund (DC scheme) + life cover (if any).On death the maximum lump sum is 4 times Final Remuneration + the value of the pension fund that relates to personal contributions.

Personal Retirement Bond

(1) Where  person has left employment with more than 2 years scheme membership, it is a preserved benefit. On death, full value of the bond is paid to the estate of the deceased, with no upper limit.

(2) Where person has not left service and transferred pension benefits to a Personal Retirement Bond and employment no longer qualifies for pension.On death, full value of the bond is paid to the estate of the deceased, with no upper limit.

Annuity

Typically most annuities have a guaranteed period - maybe 5 or 10 years.

On death of the annuitant before the end of this period,  the annuity will be paid for the remainder of the term. If it is a single life annuity and the annuitant dies after this period, the annuity will cease.

It is possible to buy an annuity on a joint basis, in this circumstance the annuity will then be paid to the survivor for the remainder of their lifetime.

IMPORTANT - ‘Enhanced annuities’ are now available for those with long term medical conditions. 

Want to know more? We are available to discuss your options, and we look forward to hearing from you.

Our job is to help you choose a product and structure that will help you meet your goals.

telephone | 091441188 and/or email | office@nelsonlife.ie

RETIREMENT & PENSIONS |  INVESTMENTS | FINANCIAL PLANNING | LIFE INSURANCE

Nelson Life Limited trading as Nelson Life is regulated by the Central Bank of Ireland.

WARNING: Past performance is not a reliable guide to future performance. WARNING: The value of your investment may go down as well as up. WARNING: You may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. WARNING: If you invest into this product you will have access until you retire (Pension Products). WARNING: The above content does not constitute investment advice, as it does not take into account the investment objectives, knowledge and experience of financial situation of any particular person. Prospective investors are advised to make their own assessment of the information contained herein and to obtain professional advice suitable to their own individual circumstances. WARNING: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for professional tax, legal and investment advice.