TESCO LLP PENSION

[Jessica5432]

Hello, my father recently passed away. I have been left with dealing with probate (which is great because I’m able to bury my head into something) He was very very high up at Tesco during 1980-2000.

He retired early and has been getting his pension for a long time. I would say about 10 years. He was only in his 60s when he passed. The cost of this pension is the equivalent to someone on £40k a year.

When I let the pensions team know they just sent me a letter saying nothing is due as no dependents under 18 and no spouse. Is this something I should challenge? can they pull the wool over people’s eyes? Is a full breakdown something you can ask for from these people??

any help would be greatly appreciated

xoxo

Was there a widow or any dependants?

If not then, unless there was some sort of ongoing life cover, which would be unusual after that long in retirement, then nothing further is what I'd expect.

Exactly what happened when my Mother, a retired teacher, died.

Am I a dependent at 32? Are my children dependents? I mean to be receiving 40k a year is a massive pot. Surely it’s his money? I might ask for the paperwork from them? I don’t want to get in trouble if further down the line I haven’t done my job as an executor properly.

It depends on the type of pension. If it was a Defined Contribution Pension then a Partner / Spouse can receive it. Your dad would need to have nominated someone to receive it, at your age you wouldn’t be considered a dependent I wouldn’t think.

@Jessica5432 Given the amount in payment I'm going to assume it was a Defined Benefit scheme. It'll be funded but not in the sense of their being a 'pot' with Dad's name on it.

Certainly ask Tesco for a copy of the scheme's terms and conditions but only so you can see it in black & white.

If there is a sum and no nomination I'd expect it to be paid to the estate.

But as above 'That's All Folks' is the answer I'd expect absent a widow or dependent minor children - his not yours.

A bit of quick Googling suggests Tesco had a DB scheme but closed it to further accruals c2015. There's a members area you can log into with the appropriate scheme detail.

https://pensionwebsite.co.uk/login

I have two pensions. A defined benefit and a defined contribution.

Once I die, if dh has gone before me, the DB pension is closed. If dh is still here he gets a widow pension, then it gets closed when he dies.

The DC pension I can leave any remaining drawdown (assuming I didn’t buy an annuity) to adult ds. But it is not that big so I fully intend to spend it all before I go - probably to help fund a slightly earlier retirement!

As others have said given the timing this is likely a defined benefit scheme. A disadvantage of such a scheme, from the position of broader family, is that in circumstances like yours the benefit is lost in death unless eligible partner or minor dependants. Essentially it is a promise from the pension scheme to pay him a benefit from retirement to death with often certain benefits if he left a spouse or minor children. So if he had made it to 95, they would have been paying for 30 years, if died the day after retirement 1 day. The pension scheme has to manage the pool of cash so everyone’s benefits can be met.

Whereas a defined contribution scheme would be his pot of money and could potentially be inherited by adult children etc depending on what had been done with it. Pension scheme doesn’t have risks in the same way as everyone has individual pots of money.

No harm asking for further clarification of the scheme and terms if they only answered briefly.

To answer your question - “can they pull the wool over people’s eyes” - they are not fraudsters and will not be attempting to cheat you out of money the estate is entitled to.

Pension trustees and administrators can make mistakes of course they are only human, but your question on benefits post death is a very standard one they will handle daily.

If it's a defined benefit scheme there isn't a pot as such. My NHS pension is £45 k a year and my husband will get just under half if I die first but there's no pot to leave. The "pot" that is mentioned in respect to these pensions is a virtual pot that is used for tax purposes.

OP, that is how DB pensions work. Unless your father left a wife or non adult children that is the end of payments. With DB pensions, it doesn’t pay to die early.

No, you won't be classed as a depenant for this purpose. If it's a defined benefit scheme then a survivor's pension would have been payable only to a surviving spouse or other eligible dependant. Adult children don't count for this purpose. And if he died more than 5 years after retiring there won't be any lump sum death benefit either. This will all be set out in the rules of the scheme - if you ask for a copy of the relevant extracts the trustees should be able to send this to you.

That sounds right for a defined benefit scheme, which at the time is likely what he would have had.

It’s not like defined contribution where it’s a pot of your dads money that he’s drawing down and might run out and can be passed on if it isn’t, it’s more like an insurance policy that pays out £40k a year until he dies, and he might have paid more or less than that in, and if he’s paid less the employer will top up the difference.

No, you are not a dependant at 32 and nor are your children. A spouse, civil partner or at the discretion of the pension company a long term partner may get a survivors pension. Occasionally someone who is financially dependant but is an adult may get something but again this is another discretion of the company. A DB scheme does not have a pot of money and the amount that your father would have contributed over the years would have been very small in comparison to what was paid out.

Thank you all! As you can tell I am very untrusting and always think big companies are trying to pull a fast one xoxo

Tesco has one of the strongest pensions in the market so no they aren’t pulling a fast one.

He will have been in the old pension scheme that closed in 2015, it was a DB one and 60% went to spouse on death if applicable.

40,000 doesn’t seem like a lot either I was paying in for less than 3 years and have nearly 11k a year frozen.

I had a DB scheme but as I’m unmarried with no children under 18 or in FTE, I moved my DB to a SIPP when I was made redundant. I asked for a transfer value off my former employer and moved the whole lot into a SIPP. Otherwise, my DB pension would die with me. Now, I can leave what remains in my SIPP to anyone I choose. I suspect this is what your father had with Tesco, but please check.

It was a DB scheme and so it will have died with him I'm afraid. If he was high up not sounds like he might have taken very early retirement with a large lump sum and then this was the remaining annual payment.

no you are not financially dependent on your father forever more simply by virtue of being his child

he was entitled to a pension income whilst alive, That has now stopped. There appears to be no widow to have an entitlement to an ongoing widow's element of his pension, and you have no entitlement to his pension at all.

I think a lot of people don't realise that a defined benefit pension dies with you unless there are surviving spouse benefits built in. It wasn't his pot of money like you have with a defined contribution pension. It was one massive pot of money for all tesco members together with a promise that he will get a certain amount from that pot for life. The fund works on the basis that some people will take monthly amount for decades and others will die very quickly and thus leave more money there to be used by the members who live longer.

Over £3k per year is a huge pot for a DB pension. Their contributions must have been very generous! Or your salary very large.

This is why I’ll be thinking of taking a bigger lump sum (although I know it’s taxed) so I can leave some to dc.

I think you can withdraw up to 25% of your pots (max £269k) tax free from 55 (57 in 2018)? Or is that just DC pots?

57 in 2028 I think.
You can take a max of 25% of £1,073,100 = £268,275 tax free

It's for both DB and DC, but if it's a DB pension you need to take the tax-free cash at the same time as taking the pension (so you can't take 25% tax-free at age 55 and leave the remaining pension until 65, for example).