Death Benefits
How benefits are paid from the SIPP in the event of death is dependent as to whether the client had commenced receipt of benefits from their SIPP.
IPM asks clients to nominate who they would like to receive the benefits in the event of their death when completing the SIPP application form.. This nomination can be amended at any time by completing our death benefit nomination form. Clients are able to nominate more than one person to receive the benefits from their SIPP.. All nominations are then placed in safe keeping until the death of the member.
As the IPM Personal Pension Scheme operates as a master trust, the trustee has the final decision as to where funds are paid however when the decision is made the wishes of the member concerned are taken into consideration.
Pre Crystallisation
There are two options available should a SIPP holder die before taking benefits from their fund.. Firstly the full fund value of the SIPP can generally be paid out as a tax free lump sum to a nominated beneficiary.*
Alternatively the funds can be used to provide a dependant with regular income, either in the form of unsecured (USP) or alternatively secured income (ASP) both of which can be administered by IPM.. Another option would be for the dependant to purchase an annuity with the proceeds.
* to avoid tax liabilities, the recipients of such a payment must be at the discretion of the SIPP trustee.
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Post Crystallisation in USP
The options available under this scenario are almost identical to those in pre crystallisation. Firstly a dependant's income can be provided in the form of unsecured pension (USP) or alternatively secured pension (ASP) both of which are available in the IPM Personal Pension Scheme.. Should a dependant wish to purchase an annuity this is also possible.
The other option is that the dependant is able to take a lump sum from the deceased member’s SIPP.. However, unlike the option available pre crystallisation, this decision would see the remaining SIPP fund taxed at a rate of 35% prior to being paid to the dependant.
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Benefits Available in ASP
The death benefits available under the IPM SIPP once a member is in alternatively secured pension (ASP) are different to those before age 75. If a member in ASP has a dependant at the time of their death then a dependant's pension is to be paid, either from the SIPP or by purchasing an annuity.
If the deceased member does not have a dependant, the options under the IPM Personal Pension Scheme are as follows:
- pay the SIPP fund as a lump sum to a nominated charity
- pay the SIPP fund as a lump sum to a person/ organisation that is not a charity.. Please note that this option will see the SIPP fund liable to a high rate of taxation.
I.P.M. SIPP Administration Limited, Cintel House, Watton Road, Ware, Hertfordshire SG12 0AD Tel 0845 130 3443 Fax 0845 230 3443
email info@ipm-pensions.co.uk I.P.M. SIPP Administration Limited is authorised and regulated by the Financial Services Authority.
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