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Drawdown factsheet

Our free factsheet gives you more information about the benefits of income drawdown and our competitive pricing.


Income drawdown death benefits

What happens to your pension if you die in income drawdown?

Unlike annuities, if you die in retirement while taking income drawdown the remainder of your pension fund can be passed on to your beneficiaries. The 55% ‘pension death tax’ was abolished in the 2015 pension changes, and any taxation will now depend on your age at death. If you die before the age of 75 you can pass on your pension as a tax-free lump sum or income (through drawdown or an annuity), but if you die after your 75th birthday the lump sum or income is taxable.

How much tax is there to pay?

If you die after your 75th birthday your pension will be subject to tax when it is passed on, regardless of whether or not you have made withdrawals or how your beneficiaries choose to access the money. Both lump sum withdrawals and regular income (taken through income drawdown or an annuity) will be taxed at your beneficiary’s marginal rate of Income Tax.

How are annuities different?

The death benefits of your pension are different if you buy an annuity in retirement instead of taking flexi-access drawdown (the new name for flexible drawdown).

Annuities do not usually pay any income to your beneficiaries after your death.

However, in some cases this may be different – if you apply for a joint life annuity or opt for either a minimum guarantee period or value protection. You can find out more about these options by using our online annuity calculator or contacting us on 020 7189 2400.

The differences between income drawdown and annuities

Important information

The decision to access your pension is an important one and will affect your income and possibly your standard of living for years to come. Therefore we recommend that before any decision is made you receive regulated financial advice or get free guidance from Pension Wise. Find out more about Pension Wise.


Past performance is not a reliable indicator of future returns

The value of your investment can go down as well as up, and you can get back less than you originally invested.

The Bestinvest Online Investment Service, including any account analysis and investment reports provided by our guidance services, is an online execution-only dealing service for investors who want to make their own investment decisions. It does not provide advice on the suitability of products and investments; if you are unsure about the suitability of any investment you should seek professional advice. Clients of our Investment Advisory Service and Managed Portfolio Service can use the website to obtain current valuations of their investments but cannot trade on these accounts online and should call their adviser if they wish to discuss changes to their investments.

Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

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© Tilney Bestinvest Group Ltd 2016.

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