Relatives of those dead for more than two years ahead of A-day could see the deceased's death benefits subject to a 40% tax charge, says Steve Bee, Scottish Life head of pensions strategy.
That is because of a requirement in the new pensions legislation coming into effect in April 2006 to pay out death benefits within two years of the event. If that does not happen, the payment is classed as "unauthorised", and becomes subject to the 40% tax charge, Bee says. On the question of what happens in cases surviving relatives forget to inform pension scheme trustees within that time fram Bee only sees one outcome: "You'll get taxed." Forgetting to inform scheme trustees in time could easily happen, Bee adds, not least because going through piles of paperwork on pensions is ...
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