What happens do a pension when die

[Blondeshavemorefun]

Just that really

Does a pension go to the next of kin /spouse /children automatically

Or does it need to be in a will

Have visions of putting lots into a pension and me dying before getting it

So what happens to it?

Does the person who gets it get it in one lump sum Or taxed on it

And if no will then what happens (obv I have a will) just wondered

Same with state pension

Once they die does their state pension go to someone of its money not received any more

Sorry if silly questions

Pb are not tax efficient at source. You buy PB with income that is already taxed. Yep, you don’t pay tax on winnings, but you’ve used taxed income

a pension gives you tax relief on earnings. So as a 20% rate tax payer every £100 you put in is boosted to £120 before you start. At 40% tax rate you’d get £140 before you start. No saving account, stocks and shares or PB will guarantee that sort of return. It’s a no brainer if you can afford it and have income to do so.

pensions also get a tax relief boost in that once you hit 55 (rising to 57 soonish) yo7 can take 25% of your pot tax free. It also has IHT effiencies as well.

always ensure you put money into a pension, as much as you can spare. PB are for people who need access to a on hand saving asset in nearer future and have utilised all their ISA allowance for the year. Yes. You could win big on PB, but the probabilities are very small. If you have average luck you’ll make around base rate interest returns over the course of a year. Average luck is based on average holding- if you have £100 in PB that’s only 100 chances of a prize (even £25) each month. If you have £40k, then you have 40,000 chances of winning each month. Probability of having a single win goes up the more you have

Assume you can't ever take out of a pension before reach pension age

Do you mean state pension age? If so, that’s wrong - you can. For a private pension, you can access it from age 55 currently, and from 2028 that will rise to 57. The new rule that’s planned is “state pension age minus 10 years” - so if your SPA is 68+ then private pension access may be 58. I say maybe because the law isn’t changed yet - but it’s been widely discussed for years and presented by government.

So you don’t have total freedom to access it whenever - but you do long before SPA.

You need to understand the implications of access though - the tax that’s due, and rules on further contributions once accessed.

For a lot of people, accessing up to 10 years before will be how they plan to bridge early retirement.

So as a 20% rate tax payer every £100 you put in is boosted to £120 before you start.

Actually you get tax relief on the total gross amount. So £125 total, 20% of that is £25. So you get £25 added from tax relief for every £100 you put in. I agree with your point, but the detail is even better!

This is best answer to explain.

I can see though that poster is in a different situation, but many people responding seem unclear. So above post is best to refer to .

id also add

if you’ve already taken a draw down income (drawing down a pension) from your defined contribution (crystallised it) pot then there may also be limitations on what is inherited by your nominees

And as others have said, just because you nominate someone to inherit doesn’t mean they’ll get it-if the situation is complicated. It is entirely down to trustees of the pension as the pension is effectively a “trust “. It doesn’t belong to you personally . It is not part of your estate to “will” to someone,

also, a defined benefit pension will mostly only pay a pension to children whilst those children are dependent. So once they leave full time education theylll not receive a pension . Spouses usually get 40-50% . but if no spouse a pension won’t normally be paid to children if they’re no longer in full time education. Exception would be if child is disabled etc. and therefore still dependent. The pension will stopped being paid on death of surviving spouse. some (rare) DB schemes will pay a lump sum to beneficiaries if you die very soon into retirement. But that’s not a given - depends on scheme. DB schemes though usually pay very good “death in service” beneifits including lump sums and surviving spouse pensions /child allowances.

If you have a DB scheme NEVER ever sell it or transfer it to a DC scheme no matter what anyone says about “owning” your pension and security it gives you. It gives you no security. Your money is now at the whims of the stock market and investments. You will have a chunk removed by the pension management fees and then the investment management fees for each investment it’s in. You carry the entire risk on your money. When you come to retire you may find £1000s of your pot lost just because you’re retiring at a time when stock market is poorly performing, or your investments are poorly performing. If you can’t defer thst pension until markets pick up and your investment increases, it’ll impact you for the rest of your life.

it’s a fucking disgrace that the government has manadated SIPP and forcing peopl,e into investment schemes that they barely understand, and don’t understand risks of. if everyone is forced to pay 5% into SIPP, that could have been 5% extra into NI and state pensions increased . State pensions are proceeds from same investments but risk and costs are spread across very working person in the country over an infinite period of time. that is how it guarantees a fixed payment. Just like DB schemes where risk was placed across all employees over many generations.

sorry for rant, but I don’t understand how labour did not kick up a storm about working class/lower income people being fleeced into investing into personal risky SIPP.

Lots of people have said confidently that the state pension dies with you. I think it may be because of their age, but when my Dad died last year at the age of 89 my 90yo Mum's state pension increased hugely as a direct result. She effectively inherited most of his entitlement. HMRC automatically did the calculations on getting notification of Dad's death and Mum's relationship to him and started paying out within a few weeks of Dad's death - a huge relief, as that was the bulk of their monthly income.

I assume the law has changed so that younger people won't get this, but it might be useful to know if you have to sort out, or help to sort out, an elderly relative's finances after a bereavement.

After receiving the death certificate the next of kin will usually go to the Tell Us Once service online. This Govt website informs various agencies including pensions.

When my father passed away I received lots of communications after notifying on the Tell Us Once page. This included some state pension payment. Just a small wind up payment.

A non state pension was one where there was administered funds. Remaining funds became part of the probate.

Ok, or put a better way, for every £100 I salary sacrifice it only costs me £80 !

@Dartwarbler
Your ignorance is shocking.

State pension is not funded by investments. Working people who pay tax (or rather NI) today are paying today’s State Prnsions.

Workplace pensions don’t operate as SIPPS.

This is back to the married women’s reduced rate , known as reduced “stamp”. Where women reduced their NI payments to springboard entitlements form their husbands state pension.

But was a bit of a scam actually, as many companies were able to reduce their NI contributions as well. Many women were put into reduced stamps without it being fully explained, or in some cases without their complete awareness.

the reduced stamp scheme was stopped in 1975 - becuase it left many women in poverty (they only receive 60% of their spouses pension plus their small bits) and was based on patriarchal notions of women being dependant on their husbands. The final women stopped paying reduced stamps in 1978/79. Theoretically then there could still be women in their 70s that this applies to, but it would be a very small part of their overall pension. It will mostly be affecting women in their mid 80-90s now.

your mum would have got 60% of your dads state pension after he passed away- hence the “huge” increase, but her pension in her own right was lower than state pension…so she still “lost” 40% of the income she lived on while your dad was alive . I imagine it didn’t exactly make her wealthy as many of her cost would have been unchanged as a widow. it may have prevented her from going onto state pension credits though.

Since 1975 everyone state pension is their own- and semantically this governemnt has sealed that by reframing state pensions as Benefits - removing the idea that it’s “our money” as a nation held in trust to pay out “our” (as a nation) pensions . Benefits are not inherited or transferable. Entitlement is based on individual circumstances including our state pesnions. .

Thanks, I don't know the specifics. I think SERPS may have been a factor (not sure I have that acronym right).

Ok, I’ve not had a SIPP OR workplace pensions so assumed same. My error…but you’re playing obtuse with semantics as a workplace pension is a DC in same way as a SIPP is. Only difference is that the workplace pension is set up by your company and they contribute to. But the point I made still applies- all risk lies with the individual …not the company or the government. This does not apply to state pensions or DB work place schemes.

but hey ho…maybe you’re unmoved by the looming crisis in pensions this will create

as for NI …I’m well aware that working people are paying for state pensioner now. I’m not ignorant but clearly didn’t articulate what I meant. We , all of us, carry the risk of state pensions. The cost of running state pension scheme is covered by all of us. If the GDP and revenues fall then it is the whole working population carrying the can and risks. The government has reserves of our money (“invested” it will then pull on to ensure that it pays its obligations to state pensioners (or at least we hope this). The point I make is again, the risk is not falling onto a single individual who is paying through the nose for their individual scheme and carrying all the risk personally

so, apologies for semantics and less than clear articulation - but point I was making still holds.

@Dartwarbler

The government has no reserves. In fact, borrowing keeps going up and the celebrate when the rate of borrowing more slows down!

Also State Pensions were assessed jointly if you reached state pension age before 6 April 2016. That’s why some now still get their husband’s/wife’s pension. It still also applies to this widowers who are still to retire but their spouses started receiving state pension before 2016. Unless they remarried.

The married widow stamp is just a separate layer of complexity but not related to this directly.

Thank you all for replies

Head exploding a bit

I need to be more savy on pensions

“but hey ho…maybe you’re unmoved by the looming crisis in pensions this will create”

DC pensions are nothing like state pensions or DB pensions I agree with you but auto-enrolment was set up as there was a pension crisis looming with ever more people not having any pension savings.

I also agree with you that it will not make much of a difference to the lowest paid, however, this will significantly improve the retirement of a significant number of people and should be encouraged.

Thank you for thst

im also curious why you felt it necessary to point out MY ignorance so blatantly and in such terms, here as you’ve not berated all the other posters who clearly don’t know even very basic stuff like DB, DC differences?

why did you do that? Why is my “ignorance” so “shocking” whereas people who are saying even more ignorant stuff are not “shocking “you

i can certainly think of a few less than nice reason as to why you did that.

unless you come in a post and claim to be an expert, everyone’s view is just based on their experiences and knowledge. My motives are no different from yours-I have some acquired knowledge, which may help OP and others on the board. My main points were around individual risk vs risk at a societal level and that still holds true.

I guess I was feeling a bit off this morning. When I start reading through threads I do sometimes shake my head and just want to scream ‘wrong’

Your post in particular seemed to suggest to everyone that they shouldn’t bother with pension savings unless they have a DB scheme and I just couldn’t leave that without comment as that is really not ok.

Sorry to bump old thread but things changed slightly

I will be getting divorced - my choice

so I now need my pension to go to my child not dh or ex dh to be

my pension is still small

I know in divorcee usually the woman claims 1/2 of man’s pension

does it have to work other way

will dh have a claim to mine ? Tho it’s tiny - tbh unless win pb big it’s not going to be massive sadly or if get inheritance - tho again that’s not set in stone

dh did work all his life. No personal/private pension so will only get the government one and also depends what he has paid via ni as self employed as well like me to how much he gets via government

he’s now not working - but another story lol

so can he claim off mine - even tho it’s tiny - or as he worked all his life no need

usuually I think - tho correct me if wrong - females claim their husbands pension as they gave up work /part time to look after kids - this isn’t the issue with us

he had a choice to work. He did for 30yrs or so

He had a choice to do a private pension like me. Just didn’t

obv I want any of my pension money etx to go to my daughter

also inheritance. If any - will dh have a claim to anything I get via my dad - if I get anything in the years to come

people talk about a financial agreement /when divorcing - how do I stop ex dh to be from getting anything / as again I want it to go to my daughter

for all I know it may go to her anyway and skip me - who knows

sorry so long

You can nominate the beneficiary with the scheme. Not all pensions continue to pay out to nok and your policies should be part of financial negotiations during the divorce.

What you've each paid in (or, in his case, not paid in) to your pensions is largely irrelevant when you come to divorce. Because if you didn't make provision for a pension presumably that money you saved was spent on family endeavours instead.

A CETV is what you want. That 'values' your pension which will form part of your marital pot and you should be prepared to share that with your ex, same as you would any other marital asset.

Sorry you are in this position. It is really unsettling, I know.

Plenty of advice over on the divorce & separation board.

Yes, if you divorce the pension you have may be taken into account and your ex may be entitled to anything up to half. It is not cut and dried however and nobody here can tell you as it is based on your own unique set of circumstances.
Who inherits your pension when you die again depends on your circumstances. If a DC pension that is being drawn down then it is part of your estate and you can leave it to whoever you wish.
If you have bought an annuity it will depend on the type eg some can offer a dependants pension after death. Often this can be between 25 and 50% of what you were receiving. Usually that means you would get less per month while the annuity is in payment.
If a DB pension the scheme rules will dictate any survivors pension.

Thank you. God why is life complicated 😢

i just want to protect my child’s future as she is little

hopefully I’m not going to die for years

Your pension can absolutely be seen as a marital asset. As a SIPP (assuming that is what you have as self employed) you can obviously see what it is worth on any particular day.
when you look at sharing assets, it can be taken into account, alongside any property you own, savings etc. You need to sort who gets what, either yourselves (not normally a good idea, although it may be for some) or especially in your case through a solicitor as you have ‘more’ . Custody of your DC will also have some impact on this.
For instance it may be worth giving up some of your pension for a bigger share of the house if you’re not renting.
It also will depend somewhat on length of marriage, assets built up previously. Every case is slightly different but the fact you are female and he is male does not have the sway it may have done in the past.
Finally, as the question was originally about pensions, do check your set-ups specific terms re. passing it on at death, you will be able to nominate a recipient, make sure you have your child/children listed there. As this is not a DB pension, you can pass it on in full as a lump sum before you start drawing from it if you die before then, and if you don’t buy an annuity at retirement you can leave what’s left to her/them if you die after you start drawing from it.

House is mine. Was mine before met and he has no claim on it

If this has been more than a short marriage, he probably has a claim on the house and pension, sorry.

Pensions vary - read the rules of your scheme!!! State pensions die with you (there’s a difference with serps but few people have that kind now)