Supporting your Family

Payments of benefits from the SSAS on the member’s death at any age are usually free from inheritance tax because the Scheme Administrator has absolute discretion as to whom, in what form and in what proportions to pay benefits.

Death before age 75 In the event of a member’s death before the age of 75, and irrespective as to whether retirement benefits have been drawn, the whole of their fund — including life cover up to the lifetime allowance — can normally be paid out as a lump sum or as income payments to their nominated beneficiaries tax-free. The member’s uncrystallised funds in the SSAS must be tested against the member’s remaining lifetime allowance and any excess will be subject to a lifetime allowance tax charge.

Death after age 75 In the event of a member’s death after attaining age 75, remaining funds can be paid to beneficiaries as a lump sum or pension income. Pension income can only be paid to individuals. Lump sums and/or pension income to individuals will be assessable income for tax purposes and lump sums to anyone else (e.g. trusts and companies) will be subject to a special tax charge of 45%. In certain circumstances, lump sums to charities can be tax-free.

Benefits on the death of a member’s beneficiary When a member’s nominated beneficiary dies whilst receiving benefits from the fund, benefits can then be paid to their beneficiaries and so on, until the member’s fund has been exhausted. The tax treatment of the benefits will depend upon the beneficiary’s age at death (i.e. before age 75 it will be tax-free but after age 75 it will be taxable at the recipient’s marginal rate of tax) and to whom the benefits are to be paid. This gives the potential for Members to pass pension funds down through the generations with the funds remaining invested in a tax privileged environment.