Our last few columns have focused on ideas on how to save and how to get yourself financially straight if you are facing debt.

Some people spend a lifetime saving and, sadly, don't get to spend the money they've accumulated in their lifetime.

With life expectancy increasing more of us are getting to spend the fruits of our labours in retirement; but what happens when you have spent a lifetime saving, into a pension scheme, and aren't there to enjoy it yourself?

Pensions are complex savings vehicles. Their tax efficient nature means that there are many rules around how much you can save, the types of investments you can hold and the benefits, either in life or on death, which can be taken from them.

If someone dies before the age of 75 holding a pension scheme which has remained untouched in their lifetime this fund can usually be paid out to a nominated beneficiary income tax, capital gains tax and inheritance tax free. After the age of 75 benefits can be paid to nominated beneficiaries either as a pension or a lump sum but will be subject to the beneficiaries' own marginal income tax rate.

Note in the above paragraph the implications for inheritance tax on a pension fund. We have focused on the income tax benefits of pensions in previous columns.

Pensions can also provide inheritance tax benefits. Modern pensions are held in trust and therefore do not form part of a deceased person's estate. So, even if a pension fund exceeds the amount of any inheritance tax allowance it will not be chargeable to inheritance tax on death.

Personal pensions that were established a long time ago may not be written in trust and will form part of the deceased's estate and potentially taxed at 40% on death. It is worth checking whether this applies to your own pension policy.

Different rules apply to defined benefit or other occupational schemes. As mentioned earlier, pension are complex- always, always, always, take advice.

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Written by Denese Molyneux - Molyneux Financial Planning