A common question we get asked relates to Inheritance Tax (CAT) on Pensions in the event of death. This is a very valid concern as most people would like to ensure the wealth they have accumulated in their pension goes to their family in the event of their death.
The treatment of pensions from an inheritance point of view is not entirely covered under CAT rules. We have outlined below the treatment of each type of pension:
|Personal Pensions and SIPPs (Self Invested Pension)||Lump Sum subject to normal CAT rules and thresholds|
|PRSA||Lump Sum subject to normal CAT rules and thresholds|
|Executive Company Pension & SSAPS (Small Self-Administered Pension Scheme)||
Company Contributions = Lump Sum is limited to 4 x Gross Income (subject to normal CAT rules and thresholds) with the balance paid as an Annuity for Life*
AVC & Employee Contributions = Lump Sum subject to normal CAT rules and thresholds
|Personal Retirement Bond or Buy Out Bond||Lump Sum subject to normal CAT rules and thresholds|
*Important Note. Transferring an Executive Company Pension or SSAP to a Personal Retirement Bond prior to death will allow for the proceeds of the Pension to be paid as a Lump Sum, subject to normal CAT rules and thresholds
|Group A||Group B||Group C|
|Applies where the beneficiary is a child (including adopted child, step child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child,||Applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or lineal descendant of the disponer||Applies in all other cases|
All inheritances over these amounts are subject to CAT at 33%
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