By Robert Hunschok, SSAS Consultant at Barnett Waddingham
Ensuring the timely distribution of death benefits from a SIPP or SSAS
Many SIPP and SSAS clients prefer not to discuss pension scheme particulars with their families. I can empathise to an extent as money matters are a difficult topic at the best of times. Family members may be overwhelmed by complex information, for example relating to the scheme’s underlying investments, especially when they have not chosen them in the first place.
A common tactic is to shelter the relatives from this burden and to stick to the status quo, with the trustees being the only people in the family who understand their pension at all. This will only work for so long. When a member dies their survivors will before long come across potentially unfamiliar paperwork regarding the scheme’s investments, the Scheme Administrator, HMRC and any linked employer. Frequently they will not know where to start.
Further, where there are multiple potential beneficiaries, there may never have been a family discussion as to 'who gets what'. Not all the potential beneficiaries might be immediately satisfied with the trustees’ decision on death benefits, no matter how comprehensive the process to designate benefits has been, and even if the distribution matches the member’s Expression of Wishes.
A possible solution
Consider instead if the member had briefed a member of his/her family on the scheme during their lifetime, allowing a rapport to be built with the Scheme Administrator. Even better, introducing a family member as an additional trustee during the member’s lifetime can mean that the onerous task of attending to death benefits is easier than it would otherwise have been.
How Barnett Waddingham can help
We appreciate that such matters can be hard to broach with your family. We can provide guidance to family members on the provisions of the scheme and the process to apportion benefits. This can be tailored to suit the existing knowledge and experience of the parties.
For example, it may suffice for us to send some people briefing notes surrounding investments or death benefits, where others may prefer a meeting, or a more bespoke report.
Update your Expression of Wishes
A final point is to remind ourselves that all members should keep their Expression of Wishes up to date, to reflect their current situation and financial objectives. While the Expression of Wishes is not binding on the trustees, as they have discretion on the payment of death benefits, it will usually be a significant factor in forming their decision.
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