The short answer is that it is A’s lifetime allowance. The longer answer requires a slight digression:
In order to provide death benefits, it will be necessary (as some point) to ‘crystallise’ these funds by paying them as a lump sum or designating them as available for the payment of dependants’ or nominee’s flexi-access drawdown pension.
The crystallisation of previously uncrystallised funds following A’s death will be a BCE if (i) the crystallisation occurs within (broadly) two years of A’s death and (ii) A died before his 75th birthday.
On the occurrence of such a BCE, it is A’s lifetime allowance that is taken into account (and not the lifetime allowance of his death beneficiaries). This is because A is “the individual” referred to in FA 2004 ss.215 to 219 (see s.214(5)).
If the provision of death benefits is not a BCE (eg because A died on or after his 75th birthday) then the subsequent crystallisation of such funds is not taken into account for the purposes of any person’s lifetime allowance.
Matthew Harrison
Babbé LLP