Inheriting pensions

[Orangio]

I have a small private pension. My husband also has a pension (bigger). If one of us died, would the other automatically receive it?

I'm currently a sahm, and wondering if we should pay into a pension for me too, or if it's pointless because it doesn't matter whose name it's in as both spouses will get it anyway?

I know you're all going to say 'protect yourself in case you divorce', but please don't consider that in your answer. I just want to know about death. Assuming we do not divorce, but my husband dies, will I get the same money regardless of whether we paid into a pension in his name or a pension in my name?

All the pensions I’m familiar with have required a named beneficiary. They were not automatic to the spouse.

The short answer is “it depends.”

Some pensions die with the holder, some transfer in whole or part to a named beneficiary.

You need to check the terms that apply to yours to see what they are.

Im not sure if named beneficiaries get a lump sum or keep getting the weekly or monthly pension?

Cant really help, but if husband or wife dies does remaining spouse get some of deceased state pension? It worries me that myself and DP not married!

You must contact them and find out. does it require you be to be listed as a beneficiary?

Spouse may get half as a pension usually but not the whole amount. So if husband got £700 a month, you’d get £350. Every pension is different though and likely you need to nominate each other to receive it. Some pensions die with the person.

It depends on the type of pension. You need to contact the pension company to find out and check that you are named as the beneficiary.

My husband died. I got a lump sum (not a lot) from each pension and I get £250 per month from each pension. I was 52 when he was killed. He was my employer so I also lost two incomes too.

Absolutely correct check the terms and conditions, to see what will happen with your (pl) pensions.

If there will be anything to inherit, the pension holder will be asked to make an expression of wishes to say who should inherit in the case of your death.

This is a technical point, which keeps the value of whatever is inherited out of the estate of the deceased and not subject to inheritance tax. It's technically up to the trustees of the pension to decide who gets whatever is available. It would be v v unusual for trustees to not follow the relevant expression of wishes

It's so very important to check that your expression of wishes is up to date.

Depends on what type of pension he has - DB(e.g. NHS/GOV ) or DC (pension from a private employer or a private pension)

With DC pensions, the nominee(s) get it, at the discretion of the pension trustee board. Like PP said, this pension is outside of inheritance tax and if you're the nominee with 100% allocation, you'd get it. However, it's best to contribute in your own pension, as when you come to withdraw it, current taxation rules apply. So you'd be better of withdrawing 2 X 25 000 pensions per annum, taxed at 20% rather than 1 X 50 xxx, which will hit the higher 40% taxation on whatever is the threshold for 40%.

When you withdraw your own pension, you have a 12500 personal tax allowance that is not taxed ( both would benefit from that if there are 2 pensions and you should try and maximize that for both) . If there is one pension, you're worse off.

I cannot comment on DB pensions, as each scheme has its own rules.

I'm so sorry @Iwant2move

I just wanted to say I’m so sorry for your loss @Iwant2move

Thank you for the advice everyone. I appreciate it so much! We'll look into each pension separately and see what they offer to whoever dies last. On the to do list!

@Iwant2move I'm so sorry you lost your husband.

State pension dies with the person.

and all other pensions, you don’t get it all, just some of it.

get your own pension is the answer

The answer will also depend on whether of not he has retired when he dies.

I agree with PP that it is very wise to have your own pension, including for the points that LemonFanta makes on the personal allowance. Do note that if you are currently an SAHM and not paying income tax then the maximum that you can put into your pension is £2880 (made up to £3600 in tax relief). It's worth doing, not least for the free cash, but it will take a while to build up a substantial amout.

On the inheritance point then there is a helpful summary here www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/pensions-after-death that goes through the different circumstances. Of course the most important thing is to check the terms of the pensions but hopefully this will be useful in understanding the complexity.