I have an uncle that is meant to receive a modest amount of money from overseas. The person in question is 60 and does not have a stable job. I want to set up a pension pot for him so that once he reaches 67 can have some extra money on top of the state pension.

However, I do not trust him not to withdraw part or all of the money from the pension pot ahead of time, and I do not trust him to not increase his monthly allowance ending up to finish the money from the pension pot ahead of time.

Given that I currently own this money, is there a way I can set up a pension pot for him where I have full control over it?

In other words, I want to contribute to this pension pot where he is the beneficiary, but he has no control over withdrawing lump sums or changing the monthly payment once he retires.

Thank You

P.S. The reason why I'm after a pension pot is that by depositing money in it there is a tax relief of 20% ‘relief at source’ which means we'll get 20% than what we deposit

  • 1
    Not sure what pension-specific options exist in the UK but generally speaking this is called a trust fund
    – 0xFEE1DEAD
    Mar 16, 2023 at 18:15
  • 2
    You actually own the money he is going to receive and are just choosing to give it to him? Or you are just the one in charge of it right now but he is entitled to it? Mar 16, 2023 at 18:50
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    @BlueMoon if the money is yours then you're entitled to decide how and when he'd be receiving it. You're looking for a "trust".
    – littleadv
    Mar 16, 2023 at 19:33
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    Is he expecting to receive a full state pension at 67? (This affects what the effective tax rate might be on income resulting from this extra pension pot) Mar 16, 2023 at 19:35
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    @littleadv The reason why I'm after the pension pot is because of the tax benefits. I updated the question
    – Blue Moon
    Mar 16, 2023 at 19:42

1 Answer 1


Once you put money in a pension fund in someone else's name, you lose control of it.

If it's used to buy an annuity, then the pension's owner also loses control in that the annuity provider will just provide a monthly/yearly income and won't allow money to be withdrawn any other way. (In theory it might become possible to cash in annuities, but this seems unlikely at present.)

So you could perhaps try to insist on it being used to immediately buy an annuity, and hope that your uncle follows through on this before the temptation to turn the money into cash some other way takes over.

Another thing to consider is how much benefit your uncle will actually get from the relief at source rebate. If he'll be receiving enough of a state pension, he might not have much tax free allowance left, and end up paying 20% tax on much of the income from pension pot anyway. While there is also the possibility of getting a 25% tax-free lump sum, overall it might not add up to that much of a benefit. You'd need to do some calculations with the actual numbers involved.

As an alternative to a pension, you could look at a "purchased life annuity" (you can search for the term directly, the only non-commercial reference I could find was to a fairly technical tax manual.) - some of the income from this would be tax-free as it would have been funded with money that didn't receive tax relief. And I think, though you'd need to consult a financial advisor, that you could buy it directly in your uncle's name. Or, as people have suggested in comments, you could create a trust fund, or simply hang on to the money and pay it out to him as you see fit.

  • a logical question would be: instead of putting money in someone else's pension fund, can you put an annuity in someone else's pension fund?
    – user253751
    Mar 16, 2023 at 22:52
  • @user253751 I can't think of a way you could do that, and I pay a fair amount of attention to how pensions work. But I don't know for sure. Mar 16, 2023 at 23:00
  • and what is the difference between "in a pension fund" and just buying an annuity for someone else, anyway?
    – user253751
    Mar 16, 2023 at 23:01
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    I think a US 401(k) is the rough equivalent of a UK pension fund. They operate under a strict legal framework in exchange for you being able to defer tax on them. Mar 16, 2023 at 23:04
  • do you still save tax when giving your non-pension-fund income to someone else's?
    – user253751
    Mar 17, 2023 at 13:18

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