Typhoon,
For the notional amount in one's pension 'pot' to remain outside an estate of the deceased for Inheritance Tax purposes, it has to be established as a Discretionary Trust.
This gives the scheme trustees ultimate sanction in who the death benefit is paid to. I remember an infanteer who nominated a girl he met on ops, subordinating his wife and three young children, a month or so before he was killed in an accident. Rightly so, the trustees chose to ignore his wishes and instead, used the money to benefit his widow.
They take the view that the survivor uses the money to help raise children when it's needed most ie; during childhood. The law changed recently to protect anyone killed on ops from having their estate crimped by IHT but the principle remains - the money should be deployed where, when and how it's needed, not when it might be wanted.
New highly relaxed legislation allows death benefits of a personal scheme to be paid out free of tax to not only a dependent, but a nominated beneficiary. The Treasury has to be careful it doesn't make transferring out of AFPS too attractive; it can't afford scheme outflows in great numbers and has moved to stop them anyway.
JTO,
I'm one chilled out dude obviously!
