Widows / Widowers pensions cut by 50%

Autistic-Jamie · 12 July 2017 at 2:50PM

How can pension fund providers / holders slash the surviving partners pension by 50% when the actual fund has not reduced? Is the 50% they keep management fees to celebrate the death of a pensioner? Are they just waiting for the surviving partner to die so they can keep the entire fund? This is Legal 'white collar' theft in Billions!

sandsy · 12 July 2017 at 2:55PM

If this is a final salary pension, there isn't a fund for each individual's benefits. There is a promise to pay a level of benefits to the member, and when the member dies, a promise to pay a reduced amount to the surviving spouse.

The scheme tries to ensure if has sufficient to pay out all the promises for all members, taking into account the probability of different payments for different members, depending on things like mortality patterns. So it has a fairly good idea of what % of members have spouses and what proportion of pensions will end up being paid to both members and then their spouses.

le_loup · 12 July 2017 at 3:12PM

Autistic-Jamie wrote: »

This is Legal 'white collar' theft in Billions!

I don't know where you got this idea from but it is nonsense.
........... and "blue collar" people have pensions too!

Malthusian · 12 July 2017 at 4:33PM

Is it WUM Day?

If it is an annuity they slash the pension fund by 50% because that is what the policyholder chose. If they wanted 100% of the income to continue to the survivor, they could have had it, at the expense of a lower starting income. There is no "fund" when the member dies, the fund was exchanged for the annuity years ago.

If it is a defined benefit scheme then those are the terms you accepted when you joined the employer's pension scheme. If you don't want your spouse to suffer a loss of income on your death, save in your own name or take out life insurance. Again, there is no "fund" belonging to the individual member. The fund belongs to the pension scheme as a whole and is used to pay benefits for all of the members, some of whom will leave widows and some won't (as they are single or their spouse predeceases them).

bigadaj · 12 July 2017 at 9:19PM

Autistic-Jamie wrote: »

How can pension fund providers / holders slash the surviving partners pension by 50% when the actual fund has not reduced? Is the 50% they keep management fees to celebrate the death of a pensioner? Are they just waiting for the surviving partner to die so they can keep the entire fund? This is Legal 'white collar' theft in Billions!

You probably need to understand a bit more about pensions.

From previous posts it sounds like your aunt is receiving a widows pension from a defined benefit scheme accrued by your now deceased uncle.

If that's the case then the company your uncle worked for has basically promised to pay an amount when he retired, with a smaller benefit for his wife, primarily because one person often needs less to live on than two.

There generally isn't a fund, these pensions were very expensive to provide and have now largely been abandoned on the private sector because they are too costly. They are still available in the public sector, but with benefits reduced, though the main reason is that for politicians it's cheaper to promise things in the future than pay for them now, so their successors get the blame when funding becomes difficult.

Autistic-Jamie · 13 July 2017 at 4:05PM

It's a pension fund currently held by assure at the last time they told my aunt the fund is in a non withdrawal fund account so it needs to be transferred although they didn't say when to request this transfer? What is the protocol of requesting the fund to be transferred to a withdrawal account as NOT all fund accounts can be accessed, which is what pension providers have been transferring funds into these accounts to prevent everyone at once accessing their funds. White or blue or black collar whatever you want to call it! LOL

AnotherJoe · 13 July 2017 at 4:35PM

Autistic-Jamie wrote: »

It's a pension fund currently held by assure

OK its a pension fund now then, and not a pension being paid? So why the anguish about it being halved? Your aunt and uncle can take out an annuity that pays 100% to the survivor if they want.

Autistic-Jamie wrote: »

Ithey told my aunt the fund is in a non withdrawal fund account so it needs to be transferred although they didn't say when to request this transfer?

When you want it?

Autistic-Jamie wrote: »

ItNOT all fund accounts can be accessed, which is what pension providers have been transferring funds into these accounts to prevent everyone at once accessing their funds.

I'm sure you meant that to mean something.

jamesd · 13 July 2017 at 5:52PM

Pension pots can be held in many types of pension products. The older ones tend not to be updated to offer the recent flexibilities, usually because it's just too expensive to do the work on the old computer systems involved and the relatively small number of customers still using the product. The solution to that is just to transfer to a more recent product which does offer the options you want.

I suggest that you give Hargreaves Lansdown a call so they can help with your questions and arrange a transfer to their product, which does offer all of the flexible options.

One important thing to check is the possibility of a guaranteed annuity rate with the old product. Those pay a far higher income level than you can get on the open market today.

bigadaj · 13 July 2017 at 6:03PM

Autistic-Jamie wrote: »

It's a pension fund currently held by assure at the last time they told my aunt the fund is in a non withdrawal fund account so it needs to be transferred although they didn't say when to request this transfer? What is the protocol of requesting the fund to be transferred to a withdrawal account as NOT all fund accounts can be accessed, which is what pension providers have been transferring funds into these accounts to prevent everyone at once accessing their funds. White or blue or black collar whatever you want to call it! LOL

Calm down.

Presumably the commonly you are referring to is reassure, who have bought up old pensions that companies or insurers want to stop managing.

Assuming your aunt is over 55 then she should be able to access the fund. So you need to ask the company what value is the fund and whether there are guarantees attached to it, which basically mean they pay a higher rate of pension.

As this is likely to be an older pension then it probably won't support drawdown, so if your aunt wants access to it more quickly, or the annuity rate they if isn't great, she'll need to transfer out to another provider. The pot can then be accessed as required from a modern account, but normally 75% is subject to tax in the year it's paid out, so taking a large lump in one go can be expensive in terms of tax paid.

Widows / Widowers pensions cut by 50%

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