Inheriting a £200,000 pension — a significant inheritance, with planning needed.

At £200,000 the numbers become hard to ignore. Before 75, beneficiaries receive the full £200,000 tax-free. After 75, a higher-rate taxpayer beneficiary faces an £80,000 tax bill — reducing the inheritance to just £120,000. This is why financial advisers increasingly talk about 'pension cascading' — the idea that you can pass your pension to your children, who can pass what's left to their children, with each generation potentially receiving tax-free benefits if death occurs before 75. At £200,000, splitting the beneficiary nomination can also help: naming two children instead of one means each receives £100,000, which may keep them in a lower tax band. The lump sum and death benefit allowance is not a concern at this level, but beneficiaries should consider taking the inheritance as drawdown rather than a lump sum to manage their own tax position across multiple years.