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Pension Freedoms has really reinvigorated the way that we think about drawing our pensions. However one of the lesser known advantages of the freedoms introduced in 2015 is the ability to pass down pension pots to children, grandchildren and even great grandchildren. This brings with it some interesting prospects for intergenerational planning and greater tax planning opportunities. This also highlights the need for ongoing financial and investment advice.
This intergenerational option not only provides some valuable inheritance tax planning opportunities but also allows family members to inherit a pension pot for their own use. With the worrying under-provision predicted for millennials, this could be a real game changer for future pension provision.
To highlight just how long a pension pot can be held, I recently came across this fascinating story regarding the 10th President of the USA.
John Tyler was the first vice president elevated to the presidency on the death of the chief executive and the first president to marry in the White House. Nearly 175 years later, unbelievably two of his grandchildren are still alive.
Lyon Gardiner Tyler Jr, 93 and Harrison Ruffin Tyler, 89, are two living grandsons of President John Tyler, who was born in 1790, one year after George Washington was sworn in as president.
Just three generations – President Tyler, his son Lyon Tyler, and the grandsons Lyon Jr and Harrison — span almost the entire history of the United States.
Here’s how it happened. John Tyler became president in 1841. He had eight children with his first wife, who died while he was in office. At 52, he married 22-year-old Julia Gardiner. They had seven children, (trivia at a total of 15 – the most of any president!). He was 63 when son Lyon Tyler was born in 1853. Lyon also had a very young second wife, and was 75 years old when Harrison Tyler was born in 1928.
Another way to look at this, these guys can boast that their dad was born 8 years before the war. ‘World War II?’ ‘Nah.’ ‘Oh wow, World War I.’ ‘Nope the American Civil War!’
Who knows, in the future our pension pots could last well into the 23rd century! Now there’s a thought!
Pension Freedoms – Update
This April marked the third anniversary of George Osborne’s pioneering pension freedoms which revolutionised the way that money can be taken from pension funds. As the name suggests, from the age of 55, people have complete flexibility to take any or all of their pension funds. The numbers that have chosen to exercise this option and the sums taken are quite astounding as can be seen from the table below:
Flexible pensions in numbers:
Whatever the motives of the Exchequer at the time, this has certainly generated a considerable tax windfall to the Exchequer!
John Dowding Dip PFS
Morgan Lloyd Administration Limited
This information reflects the regulatory and taxation situation as it affects pensions at the time of publication in April 2017 and is provided to the best of our knowledge. It is not a complete representation of the pensions legislator landscape and is for guidance and information purposes only. We cannot be held responsible for any errors, omissions or subsequent legislative changes.
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