Survivor's pension - how to set up a specific pot for inherited pensions

By default, if pensions are scheduled to continue in drawdown after the owner's death, the software will place the inherited pensions in one pot, named after one of the inherited pensions. This inherited pension will be set to be drawn upon 'as needed'. This pot does not appear in the drawdown pensions list. If you would like to be able to edit the inherited pension e.g. set a fixed level of income, designate beneficiaries etc, this can be achieved by creating an empty inherited pension in the drawdown pension screen. The software will then use this pot for survivor's drawdown.

To start, double check the survivorship settings on your client's money purchase and drawdown pensions.

1. Go to the Pensions > Money Purchase screen to check the survivorship options. This is important in the event that any funds remain in a money purchase at the time of your client's death.

 

Select the pension in the ledger to the right side of the screen. 

 

Expand Advanced Settings and click Survivorship Option

Ensure "Move to beneficiary drawdown pension" is selected and click OK

 

Click Update to save your changes. 

Repeat this check and update if your client has multiple pensions. 

 

2. Next, go to the Pensions > Drawdown Pensions screen to check the survivorship options for current and future drawdown pensions.

 

Select the drawdown pension (USP) in the ledger to the right side of the screen. 

 

Expand Advanced Settings and click Survivorship Option

Ensure "Continue unsecured pension payments" is selected and click OK

 

Click Update to save your changes. 

If your client has multiple drawdown pensions (current or future), repeat this check and update each pension. 

 

3. Go to the Pensions > Drawdown Pensions screen to enter an inherited drawdown pension for the survivor. 

Select the survivor as the owner of the pension in the People panel, right. 

 

4. Account Name: Enter a name for the future inherited pension. 

5. Tick the "Use this account for inherited pensions option".

 

6. Expand Withdrawal Limit & Annuity > Withdrawal Limit. 

7. If required, set a limit on how much income can be withdrawn from the survivor's drawdown pension. By default it will be set to As Needed. If you don't want this pension used, set to Do Not Allow. If you are going to set a planned withdrawal to take out a specific amount each year, set to Scheduled Only if you don't want any more than the planned withdrawal taken.

You needn't be concerned about the Start Withdrawals event at the top of the panel. Leave it set to Start as drawdowns can only begin once the pension is funded, after the client's death.

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8. Expand the screen's Advanced Settings and click Growth to set the future growth rate on this pension. Otherwise, the software's default settings for from Plan Preferences will be used.

If a model portfolio is being used to derive growth based on market assumptions (if the "use asset allocation" option is ticked), click Asset Allocation to set an asset allocation for the pension. 

   

 

9. Click Add to save your changes.

10. Optionally, if you want the software to withdraw a specific amount from the pension each year, go to the Planned Withdrawal screen and set up a withdrawal of the required amount from the inherited pension to run from the first mortality event to the last one.

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10. Finally, go to the Let's See charts to check the results. 

 

If you scheduled income to be taken "as needed", it may be that no drawdown income is needed. The survivor has inherited enough money (deposited into her or his cash account) to meet expenses until the end of the plan. 

Read more

Scheduling planned withdrawals from pensions