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?

@HPandTheNeverEndingBedtime so it sounds like both of your pensions are probably ‘defined benefits’ or similar, set up by your employer on the terms they’ve agreed with the pension provider, and what you understand is probably true.

It’s worth a check through your paperwork or call to your provider to double check and speak to a financial adviser if you want to explore alternative types of pensions. You probably get higher than normal payments in retirement vs what you’d get in a defined contribution plan though, so you might decide on balance it’s worth staying as you are.

30s is an ideal time to look into these details - you still have time to course-correct if necessary!

@Everylittlethingsgonnabealright Thanks for taking the time to reply, certainly food for thought.

Because

• you don’t pay tax on pension contributions - free money.
• your employer will often make contributions or match your contributions - free money.
• your money will be invested and is more likely to grow over the long term - so more likely to keep up with inflation.
• if you choose the right kind of policy for you, your money won’t go poof if you die before retirement age.

Investing in your mattress will mean the value of your money erodes with inflation and you won’t get the tax savings or free money.

With regards to your LGPS pension, your daughter shall receive a death grant should you pass away. This is a one off tax free payment which falls outside the estate. She will get this regardless of her age or being dependent.
She will also be entitled to a pension should you pass away and she is under 18 or 23 if in full time education.
A child’s pension can be paid over the age of 23 if she is dependent on you due to disability etc.

Because it’s mostly incorrect.

You can leave a DC pension and AVC’s to a nominee, 100%, tax free before 75, taxed as income after 75.

DB pensions are far more complicated but as the majority of those are either government backed or closed, only the scheme can confirm.

Jesus, such awful ‘information’ from some people.
There are two types of pension
1: DB, think Teachers /police/ local government etc. They usually come with Death in service cover ( life insurance) so if you die before retiring, whoever you nominate gets 2 or 3x your salary as a tax free lump sum. What happens with the pension depends on the scheme. After retirement, it’s usually only a spouse who gets 50% of your pension per year ( sometimes dependant children).
2: DC pension, most workplace schemes (a good one will have death benefits too) and personal Sipp pensions. If it’s one without any special guarantees etc. then it’s simply a pot of invested funds and the value gets paid out, tax free ( before the age of 75) or taxed at the beneficiaries tax rate after 75.

You DONT have to buy an annuity with it, it can stay invested or be used by way of drawdown.
If someone does buy an annuity then it either dies with them, spouse gets half or sometimes the remaining value is paid out - it all depends what sort of annuity has been chosen as there are numerous varieties.

You need to look at the small print on your pension and also check if you've nominated anyone to pass it on to. In our cases, if the pension has been taken yet, then there's a lump sum for eachother and half pension for the spouse for life. If pension has been started, then half pension to spouse for life.

I have 2 pensions. A Teacher's Pension I have started taking. If I die DH gets half for rest of his life. Other one Stakeholder Pension defined contribution. I am in process of buying an annuity as rates are good ATM. I will get a set sum every month for test of my life. There is a ten year Guarantee. If I die before I have been paid 10 years worth, the remainder up to 10 years worth will be paid to my estate. I chose 10 years. I could have chose shorter or longer.

Presumably, if you died after 10 years, any remainder is gone? Or have you bought a 10 year annuity rather than a lifetime one?
There are so many variables with annuities, it seems a bit of a minefield.
I’d probably need to get one as an extra source of guaranteed income as I’ll be worse off if widowed than DH would be - I would only get half of his Forces pension. We’ve got £100k life insurance to age 70 to fill the shortfall but after that I would lose £15k a year (his state and forces pensions) My guaranteed income if widowed after 67 would be £14k in today’s money plus Sipps worth maybe £200k so my plan would be to buy £6k income guaranteed with annuity and keep the rest invested in case of care needs.

It depends on the pension, if I die whilst still working, DH gets 2x my annual salary, if I die after retirement he gets a certain amount, not sure what. His pension doesn’t give me the same though. When my dad died, my mum got his pension.