Employees warned over potential pensions tax

engineering and manufacturers body EEF has warned that staff with some of the
smallest occupational pensions could face a 35 per cent tax charge if they die
in the first five years of drawing their pension.

tax simplification proposals issued last week could mean that any lump sum,
usually paid out to relatives tax-free if a pensioner dies inside five years,
would be taxed at 35 per cent.

EEF believes the move is not intentional, but part of a drive to eliminate
wealthy company bosses passing on tax-free capital from pensions if they die.

are concerned that staff will miss out on cash that could be used for funeral


By Ross Wigham

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