There are also a number of other agents involved in a pension plan:
The plan promotor, meaning the entity or company tasked with setting up or implementing the plan. The promoter is essentially the person who offers the pension plan to prospective investors.
The member or members, meaning the people who arrange the plan. The plan is ultimately created for their benefit. In other words, it will be the person who receives the benefit upon retirement, disability, death or other contingency. In the event of death, the member will naturally be unable to benefit from the savings; for that reason the plan will have one or more named beneficiaries.
Who can be a beneficiary under a pension plan?
The member is free to name one or more beneficiaries, though typically they will be their spouse or natural heirs. The participant must name the beneficiaries in the event of death by signing the accession and beneficiary designation form.
If the member names more than one beneficiary, then each must be assigned a percentage of inheritance.
And if no-one is chosen, they will be those named in the will. It may also be the case that the will fails to contain any such express designation. In that case, the beneficiaries will be those prescribed by applicable law; usually the legal heirs.
Paperwork needed to redeem a pension plan
To redeem the plan, the beneficiaries must submit the following paperwork:
Application based on death.
Original death certificate of the pension plan member.
Paperwork evidencing the right of the beneficiaries: beneficiary designation form, last will and testament, declaration of heirs, certificate of last wills, family book, inheritance deed and/or estate partition papers.
Photocopy of the deceased's ID card/document.
Photocopy of the beneficiary's ID card/document.
Taxation when inheriting rights under pension plans
The amount received upon redeeming the pension plan will qualify as income from work for personal income tax purposes, but will never be subject to inheritance tax.
As the income from the pension plan will increase your general taxable income, it will be taxed in your tax return at the appropriate tax rate. Note that if there is more than one beneficiary, they do not all need to redeem the plan at the same time.