Beneficiary flexi-access drawdown (BFAD) allows individuals to pass on pension benefits in a manner where the beneficiaries have immediate access to the funds after death, while retaining some of the main advantages of being within a pension arrangement. This includes tax-free growth and favourable IHT treatment.
The rules for who can receive pension funds as a BFAD arrangement are quite complex though.
Additionally, the option to “nominate” non-dependants means that expression of wish forms need to be regularly reviewed and updated where required.
Paul Squirrell, Fidelity Adviser Solutions’ pension expert, explains.