PensionerOne of the biggest gripes that people have about pensions is that if you die after you buy an annuity only a small part of the cash passes on to your spouse or partner and the rest is lost.

If you have no partner or spouse all your hard-saved money disappears into the ether. But if you could pass on your pension as part of your estate when you die, would you be more willing to save?

At the moment you can pass pretty much any asset to whomever you choose when you die, except your pension.


And it can be a pretty substantial asset. Often a person's pensions is the second largest asset they have after their home, and you wouldn't stand for the value of your home being wiped out on death.

So how could it work? Well, the government would only go for it of it could guarantee it could still tax you - after all the government isn't known for giving anyone something for nothing.

To keep the government happy the pension pot, or annuity cash, could be passed on not as easily-accessible cash to fritter away but within a pension wrapper. This means that the person who inherits the pension could only access it when they are 55 years old and it would be taxed as every pension wrapper is normally.


If you are unlucky enough to die before you retire your pension saving is usually passed over to your spouse or partner but if they then die, the pension is lost. If you had provision in your will passing that money to your children, then your cash would stay in your family.

This would effectively solve two problems; people would no longer feel that pensions were a big con because the money they saved would stay in their family. And secondly, younger generations who are struggling to save now would be able to inherit a savings pot and therefore would not be entirely reliant on the state to fund their retirement when they hit old age.

As the amount of pension savings dwindles rapidly as you move down the generations - generations that are paying off student debt and focusing on saving for housing deposits - allowing pension pots to be inherited would bridge a ever-widening savings gap.

Passing assets that you own onto your children may not seem like a radical idea but when it comes to pensions, it could be the kick-start that they need.

More stories