How To Spend Your Pension Fund AND Leave A Legacy

Don't Miss The SIPPclub Special Offer Below.

How Your Pension Fund Can Protect Itself

It’s a natural instinct to want to pass your money onto your children and others.  But with more of us living longer, and an increasing number of us needing expensive care towards the end of our lives, the prospect of being able to leave a meaningful sum is a diminishing one.

But it doesn’t have to be that way.

Once you reach 55, you can draw benefits from your pension. 

You could set up an annual withdrawal and use the proceeds to invest in a life assurance policy for the benefit of your children.  Or a charity.  Or anyone else, for that matter.

Your pension would effectively be protecting itself.

On your death, a lump sum would be produced to provide your legacy.

And that means you could spend your whole pension fund during your life, in the comforting knowledge that you won’t be depriving those you leave behind of the legacy you’d like them to receive.

If You’re Not Yet 55

Although you won’t be able to withdraw money from your pension fund so it can ‘protect itself’, you will be able to set up a life assurance policy for beneficiaries of your choice.  You’ll simply have to pay the premiums from your income or your savings.

It’s the perfect way to provide money for your spouse or partner should you die early, enabling them to enjoy the retirement you had in mind for them.

It’s Tax Efficient

Your pension fund is not subject to Inheritance Tax.  And if the life assurance policy is written in trust, it won’t be subject to Inheritance Tax either.

Interestingly, there’s an Income Tax advantage with the life assurance policy.

If you die before age 75, your pension fund can be paid, tax free, as a lump sum, or as a drawdown pension to any beneficiary. 

But if you die at or after age 75, the benefits will be taxed at your beneficiaries’ marginal rate, which could be as high as 45 per cent (as at February 2018).

The proceeds of a life assurance policy written in trust aren’t subject to Income Tax, no matter at what age you die.  And that could make it a lot more attractive for those you’d like to benefit.

It’s Flexible

Once you’re 55, under flexi-access drawdown, you could make tax free withdrawals from your pension to fund the annual life assurance premiums.

You’re able to withdraw 25 per cent of your pension fund this way, so there’s lots of scope to cover future premiums.

If you don’t draw an income at the same time as taking out the tax free cash, it won’t affect your ability to continue to contribute to your pension.

How To Protect Your Pension If You Have A Final Salary Scheme

Rather than transfer your fund to a personal pension to create a lump sum to pass on, which means you give up the final salary guarantees and you take on all the costs and the risks, leave the money where it is and take out pension protection

If you die early, those you leave behind will pick up a lump sum.  And if you live a long time, you'll enjoy the benefits of your final salary pension. 

To provide your loved ones with a lump sum when you're drawing your final salary pension, take out pension protection and pay the premiums from your retirement income.


What It Costs

Life assurance premiums are dependent on a number of factors, including your age, health, and what sort of policy you’d like to take out.  Essentially, there are two types of policy.

Term Cover

Your chosen level of pension protection is guaranteed to be paid out should you die at any time during the term.  At a pre-set age, the cover ceases.  Typically, this would be age 80, 85 or 90.  You choose the term to match your needs.

Whole Life Cover

Your chosen level of pension protection is guaranteed to be paid out whenever you die.

The table below provides some indicative figures for the annual cost of pension protection of £100,000. 

pension protection

Find Out What Pension Fund Protection Will Cost You

Time is critical when it comes to life assurance.  The table above clearly illustrates the earliest you can put this in place, the least it could cost. 

That means more money is left in your pension fund for you.  And more for your loved ones.

Our pension protection service is provided by Vita, a firm that’s been providing independent expert advice since 2010.  Over the years, it’s arranged more than £1 billion of cover for its customers with the top insurers in the country, including Legal & General, Aviva, Zurich, AEGON, LV=, AIG Life plus many more.

SIPPclub Special Offer

SIPPclub has negotiated a deal with Vita to guarantee you the best price.  Through SIPPclub, you'll get a lower cost compared to going directly to the insurance company.  What's more, you can use Vita to run a free comparison of your existing life cover, using the SIPPclub discounted rates, to see if you could save money on your existing policies.

To qualify for the best rate deal, you must complete the form below.


Once you’ve completed the form below and hit the submit button, a friendly expert adviser from Vita will be in touch with you to discuss your specific requirements in more detail.  Vita doesn’t provide generic quotes online as they can often be inaccurate and misleading.

The adviser will provide you with quotations, options and advice specifically tailored to your personal circumstances and requirements.  They’ll need around 15 minutes of your time, but in return, you’ll receive a free, award winning report.

Should you decide to go ahead, the adviser will help you with the application forms and put your policy in trust, for tax efficiency.

Vita is authorised and regulated by the Financial Conduct Authority.  It takes full responsibility for the advice and recommendation.

The best bit is that you won’t be charged a fee... ever.  And above all, you’re never under any obligation to go ahead.

To discover what it’ll cost to protect your pension for those you care about, please complete the form below.

Pension Protection Service

To discover how to spend your pension fund and leave a legacy, please complete all the fields of the form below.

  • DD slash MM slash YYYY
  • Please tick those for which you'd like quotes.
  • This may be about your health, or details of your existing policies you'd like compared (if there's nothing, please put N/A).


investments

Popular Investments

If you’re looking to diversify your pension or other money beyond the stockmarket, or you want the best return on your deposit accounts with the highest level of consumer protection, here are popular investments chosen by SIPPclub Gold Members.



IMPORTANT NOTE: NOTHING FEATURED ON SIPPclub IS EITHER AN IMPLIED OR A SPECIFIC RECOMMENDATION TO MAKE, OR TO REFRAIN FROM MAKING A FINANCIAL DECISION.  THIS PAGE HAS NOT BEEN APPROVED AS A FINANCIAL PROMOTION.

If you request an introduction to a pension or investment provider, you explicitly accept SIPPclub's Terms, and you acknowledge this is neither an endorsement by SIPPclub, nor a recommendation to invest or not to invest.

As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment is right for you.  Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence.  If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk.  Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.