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Converting dependants' pension into lump sum.
Providing the registered scheme rules allow this, some or all of a dependants’ pension can be converted into a lump sum. This can be a very tax efficient option as it's paid tax free up to the lifetime allowance.
How it works
Trustees can choose to provide dependants with a lump sum, a pension or a combination of both. They may need to make a simple amendment to the scheme rules to allow them the discretion to convert the dependants’ pension if this is not already in place.
The lump sum can then be paid tax free up to the lifetime allowance. If the amount exceeds this, the trustees can request the balance to be paid as a pension.
The lump sum can then be paid tax free up to the lifetime allowance. If the amount exceeds this, the trustees can request the balance to be paid as a pension.
What happens next
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