Canada Life believes that changes in pension legislation mean that annuities could be the best way to pass wealth to beneficiaries.
When pension simplification is brought in, pensioners will no longer be required to purchase an annuity at 75 if they opt for an alternatively secured pension. The company believe that a tax efficient way to pass on pension fund assets is by purchasing an annuity and gifting the income to a beneficiary through a trust.
If this income is considered to be outside of what is required to maintain their standard of living, the gift will fall outside the estate and be exempt from inheritance tax.
Our view
This is tax efficient but it will prove useful to only some as not all will want income and lose capital access.
Learn more about Pensions Simplification in our Pensions Simplification Centre.