Flexibility: Unlike an annuity, any remaining funds can be passed to your spouse, children or any other beneficiaries upon your death. Tax Efficiency: The generous taxation relief during the accumulation phase of your retirement fund, as well as the fact that retirement funds are outside of the estate for inheritance tax purposes (and therefore not liable to inheritance levies except in exceptional circumstances), has led to pensions largely being seen as one of the most tax efficient methods of saving and investing.