Only a dependant of the member could receive a drawdown pension on the member's death before 6 April 2015. Now a nominee or nominees can also receive a drawdown pension. This is called nominee flexi-access drawdown.
And on their death, a successor or successors can take a drawdown pension. This is called successor flexi-access drawdown.
A nominee is an individual nominated by the member or the scheme administrator who is not a dependant. The scheme administrator can only nominate an individual where there is no surviving dependant, individual or charity nominated by the member.
A successor is an individual nominated by a dependant, nominee or successor of the member, or by the scheme administrator. The scheme administrator can only nominate an individual where there is no surviving individual or charity nominated by the beneficiary.
A dependant or named beneficiary can choose to take their benefits as a lump sum, an annuity or as nominee or successor flexi-access drawdown. The scheme administrator can only nominate a beneficiary to receive flexi-access drawdown where there is no surviving dependant or named beneficiary. If there is a surviving dependant or member nominee, the scheme administrator wouldn't be able to pay flexi-access drawdown to anyone else; only lump sums can be paid.
Apart from being good practice, it is imperative that a member nominates and keeps their nominated beneficiaries up to date if they want them to have access to all death benefit options available under the scheme including flexi-access drawdown.
Nominee and successor flexi-access drawdown operate in an identical manner to dependant's flexi-access drawdown. In particular:
The retirement freedoms have changed general thinking towards pensions. Nominee and successor drawdown are seen as an attractive means of:
Flexi-access drawdown (FAD) replaced the capped and flexible drawdown options for individuals setting up a new drawdown plan after 6 April 2015. It also replaced any existing flexible drawdown plans at 6 April 2015. Read more about flexi-access drawdown.
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.