I want to transfer my private pension, taking out the 25 per cent tax-free lump sum and reallocating the rest into another fund, without drawing any further income from it. What happens to such a set-up upon my sudden death? How would the pension be passed on to my beneficiary?
RP, via email
Mike Winstanley, director of wealth management at Bentley Reid, says:
Transferring a private or defined-contribution pension and reallocating the balance after taking the 25 per cent tax-free lump sum requires careful planning. The remaining pension fund can be reinvested via pension drawdown, where it stays invested and can be withdrawn as needed subject to income tax, or you can leave the funds to grow without drawing income.