Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
You are over 55 so you can liberate your pension. 25% of the sum liberated will be tax free and the balance at your marginal rate of tax, presumably, from the tenor of your question, is 45%. If you die and your children inherit your pension pot then post 6 April 2016 the following rules apply [Source: The Telegraph]:
'In very broad terms, when someone dies under age 75, under the new regime the recipients of their unspent pension cash won't be taxed at all.
Where someone dies over 75 – and that is likely to be most cases, based on our longevity – the recipients of the cash won't pay a 55pc pensions death tax. Instead they'll pay their own "marginal" (highest) rate of income tax on the pension cash they take as their inheritance.
This would put the people inheriting the pension cash in the same position as the owner of the pension pot: you can take all the money, in the form of regular sums or chunky, one-off withdrawals, but you do have to pay income tax on the money at your highest marginal rate.'
I think the reality is rather better than you thought!
You may need to protect your pension pot if you are in danger of exceeding the new limits. Here is the advice from the Money Advice Service:
'Protecting your lifetime allowance
If your total pension savings exceeds £1 million on 5 April 2016, you may be able to apply for protection under the Individual Protection 2016 and Fixed Protection 2016 schemes.
For those who had a total pension savings that exceeded £1.25 million pounds on 5 April 2014 (before the threshold reduced), you may be able to apply for protection under the Individual Protection 2014 and Fixed Protection 2014 schemes. You have until 5 April 2017 to submit your application to Her Majesty’s Revenue & Customs (HMRC) for these schemes.'
I do hope that you have found my reply of assistance.