What happens to pension if I die?

BeefyGrowler

Hi All

I have a couple of small pensions post set up through past jobs and am in the process of setting up my own pot as my current company doesn't have a pension scheme. What happens to my pension pots if I die before retirement? Will my wife be entitled to the monies when she retires? Do I need to put this in a will?

Your help on my option is much appreciated

MikeJones_2

Hi BeefyGrowler,

If your former pension schemes were defined benefit, then the Scheme Rules will determine what (e.g. lump sum, pension, death grant) is payable on your death, when (before or during retirement) and to whom (spouse, civil partner, dependants) and in what proportion (e.g. spouse's pension of 50%, 66% etc).

The benefits available on your death will depend upon the Scheme Rules although the Trustees may have discretionary powers in certain circumstances, which they may or may not exercise.

Some defined benefit schemes allow you to complete a Nomination Form or Expression of Wish Form (or some similarly entitled document), so you can inform the Trustees of your wishes regarding your beneficiaries. You should remember however, that Trustees are not necessarily obliged to take this into account in making their decision.

If one or more of your previous schemes was money purchase then the death benefit is normally the value of your 'pot' within the policy/pension fund attributed to you and you will normally have been asked to complete a Nomination Form or Expression of Wish Form.

Write to the Pensions Administrators of your previous scheme and ask them to specify what is available to you.

Remember that your pension schemes may provide different benefits for its active members than those it provides for preserved members. When making enquiries with your scheme make sure any benefits they quote are relevant to you as a preserved member, noting particularly when you ceased to be an active member.

Rules differ from scheme to scheme and are wide and varied in content. Don’t assume that what applies to one of your pension schemes will necessarily apply to others that you may have.

I hope this helps.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

EdInvestor

Normally death benefits from pensions not in payment are paid outside the estate and free of tax.