What happens to my pension if I die

[Susieblue18]

DH and I are trying to pay more into our pensions so we can hopefully retire around 60. What would happen if one of us died just after retirement, does the spouse get the same pension the person would have?

It depends on the pension. You would need to look at the paperwork behind it. Often the spouse can get half but often nothing. You need to look into your pension documents.

Depends what the terms are but highly unlikely.

What type of pension do you have?

A defined benefit one (rare these days) often has a spouse pension.

A defined contribution one basically means you end up with a large pot of money to do with as you please, some people use it be buy a guaranteed monthly pension, others take some or all as cash and so could ensure its passed to spouse on death.

Im not an expert but I think so because you are married and dependent on each other, or they get some atleast.

Im a single parent and I believe that once DD is no longer financially dependent on me if I die all my pension contributions go 'poof' into the ether because I dont have a partner which is annoying.

I'd check this because some might go to your estate or a nominated person, it would be worth looking at your paperwork.

For me, DH would get a small lump sum and about a third of the pension I should have received, I'm assuming until he dies. The old scheme was 50%.

This one reason I dislike pensions, my grandad died young and his pension died with him leaving my Nan with nothing from it. My dad died before pensionable age and we received a very token amount comparable to what he had paid in. If he had been 18 months older (pensionable) we would have received nothing.

Depends on the type of pension. Some defined benefit schemes provide a spouse's pension. Perhaps 50% of what your pension would have been. If they remarry the pension can end. If you've already retired and bought an annuity with a defined contribution pension some offer this too. If you died before retirement with a defined contribution scheme, normally the value of the pot would go to your nominated beneficiary. Make sure you've named someone or the pension company will decide.

There are different types of pensions

Is it a SIPP? If it is, they are normally transferred to your declared beneficery (which can be your spouse).

Seeing as you are spending lots of money on it, I suggest you work out what it is and find out about its key features (including tax implications) . Did you get an advisor, they could answer questions?

If I die in service, (am a teacher not a soldier for clarity) DD gets a 6 figure lump sum. If I die after retirement, she gets 3 months of pension payments and that's it.

I have 3 workplace DC schemes and, though I know she’s unlikely to get its full worth if I die (I’ve never looked up what she would get), my mother would definitely get something as she’s a named beneficiary on them all.

It depends on the type of scheme you have, the specific rules of the scheme, and also whether the benefits are already in payment or not and if so, the decisions you made at the point of them coming into payment (for example if you buy an annuity at retirement you may get the choice to take a lower pension that then provides a spouse’s pension if you die, or take a higher pension which doesn’t pay anything out after your death). Too many variables for anyone here to advise, you need to check the rules of your specific schemes.

No that’s not correct. There is a death grant of 5 years pension less what has already been paid and an ongoing pension.

Polkadotties it will depend how old the DD is - if she’s grown up there won’t be an ongoing pension.

If DB pension then you nominate an individual and in my case they get a lump sum and a smaller pension

There will still be a death grant regardless if the pensioner dies within 5 years

If Dh dies in the next year I will get the full final salary for five years and then I will get 2/3 of what we currently get.

The defined contribution pot comes to me in its entirety and I can then leave it to DS.

Our friend looked at his and there was no survivors pension, so he took it all out and invested it in stocks and shares.

Note there’s a difference between a pension and an annuity and what happens for each.

pension = paying money in.
annuity = money pays out to you normally post age-55.

With a pension, there are normally terms and conditions around what happens if you die. Usually along the lines of a ‘death in service’ benefit, which would pay out a lump sum to your estate. Your will (or intestate rules if you haven’t made a will) would dictate who gets the money. Some pensions will specify that they’ll pay a certain amount of lump sum rather than it relating to how much you have saved up in your pot. Check with your pension provider to confirm what the terms are, and make sure you’ve told them who your dependents/beneficiaries are. Sometimes the trustee of the pension scheme will get final say about how much is paid to whom, but your preferences are usually taken into account.

When you reach retirement age you normally have to choose to buy an annuity with your pension pot money (if you want to - there are other options like getting a taxable lump sum). When you buy an annuity, you get to specify what terms you want after you die, such as adding a guarantee period (where a lump sum or regular payments would be paid to your estate if you were to die within that term), or spouses benefits (eg 50% or 100% paid to your spouse after you die for the rest of their life). All of those choices come at a cost - ie if you choose a 100% spouse’s benefit, you’ll get lower annuity payments during your lifetime than if you were to choose no spouse’s benefit. So when you make your annuity choices, choose very carefully, read all the literature your pension provider sends you, shop around to get the best rates and if in any doubt pay for independent financial advice - it’s worth the money.

Above mainly applies to defined contribution pensions. Defined benefit pensions tend to be more tightly controlled by the conditions agreed between the employer and pension provider, so you might have less choices.

HTH

• intestacy, not intestate

How old are you and do you have a pension or annuity? Please read my post above because it might not be true that your money goes ‘poof’ - pension providers have an obligation to pay out the money to the correct people. It might be a simple call to your pension provider to ask to put your mind at rest.

When my husband died they paid out the lump sums directly to me.
when I die, it goes to my nominated beneficiary, my son.
my uncle has just died and his pension lump sum will go to my mum, named in his Will.

your govt pension is different.

So your better off putting it in a mattress than a pension pot so atleast your other half can access it if you die early and they don’t loose out?

Why do people put them into pensions if that’s the case?

Without OP saying there's no way to be sure but it sounds like they're in personal pension schemes rather than company DB.

What's the benefit - the company also contribute.
Downside is you have to buy an annuity or comply with lots of rules to get your money out. Also as its invested its value is related to the performance of the fund on the stock market. And don't forget there'll probably be fees to pay.
What happens after death - check the rules for the scheme you're in.

Keep your savings going though, the financial sector needs to have your money to pay their staff.

@Everylittlethingsgonnabealright I'm late 30's, DD is early teens so hopefully have plenty of life in my yet. I have 5 years in a teachers pension and 10 years in an LGPS one, DD is named on both as my beneficiary but I'm sure the wording on both of them is that she only gets a pay-out if she is dependent on me but I may have misread it. I thought spouses or other financially dependent people get to benefit but if my DD is living a financially independent life (which I hope she is by the time I die) then she wouldn't get anything and then it goes 'poof' pleased to hear this may not be the case. I suppose like most people in their 30s I haven't paid too much attention, just made sure I have a pension.

If unsure ring up and ask.