Pensions Ahhhhhhh

jack_spratt_2

EdInvestor wrote: »

If this type of company pension was really fair, you would see it replicated in the private pension/annuity system.Needless to say, it isn't.

Not a cat in hells chance!! they would not because it would be to costly to provide the benefits that a good company pension scheme can offer
Companies that provide annuities are there to make a profit for there shareholders not provide a service to there employees

EdInvestor

margaretclare wrote: »

Many people seem to be confused about what a pension is for. As I see it is for providing you - the individual - with an income for the years in which you won't be able to work, but when you will still expect a reasonably comfortable lifestyle. It is NOT intended to be passed on to anyone else

Actually however, that's not how the rules work.

For instance it is not a requirement to take an income from a pension fund until the age of 75.

If someone dies before age 75 with a pension fund from which they have not yet taken an income, their beneficiary can be paid the fund in cash, totally tax free, outside the deceased estate, and thus not subject to inheritance tax.

In effect people who can afford to do this are using the pension system as a kind of life assurance policy - and a very lucrative one, as pensions attract tax relief at 40% for high rate taxpayers.

So it's really not clear at all from the rules that a pension is designed to produce a (taxable) retirement income. Pensions can be used for other things.

jem16

EdInvestor wrote: »

Pensions can be used for other things.

As long as you plan to die before you are 75.

MikeJones_2

Hi ellies angel,

Might I just clarify a point from your original post which doesn't appear to have been anwered in this thread? In it, you said:

ellies_angel wrote: »

I am in a relationship with a Widower who receives a pension from his late wife. He has one dependant child. If we were to co-habit or marry he would lose this pension...

I understood this. It is not uncommon, and not necessarily fair - but I want to stick to the facts, if I may.

You then went on to add:

ellies_angel wrote: »

I am superannuated at my work and I could put my partner down as the beneficary of my pension should I die, however if he was then to co-habit or remarry he would lose it....

ellies_angel wrote: »

Hence the reason I have now listed my nephew and godson joint beneficaries

Why would your partner lose out on the death benefits from YOUR pension scheme?

Have you checked with YOUR pension scheme that your partner cannot be a beneficiary even in the circumstances you have described?

In essence, what I'm trying to tease out from you is have you ASSUMED that just because your partner's scheme has a specific rule - doesn't mean that YOUR scheme will have a similar rule?

As Scheme Rules can be quite convoluted you might be well advised to put in writing your personal circumstances and submit this to your Pensions Manager or HR Department. If it is too sensitive a personal issue, you could instead write to the pension scheme administrators.

The things you need to establish are:

- Does the spouse's pension cease on (i) remarriage (ii) cohabitation
- Is there any age-related reduction to a spouse’s pension (e.g. Female spouse is 10-yrs younger than Male member)
- What is a dependant?
- Is there a Rule about whether a dependant has to been 'financially dependent' or 'financially inter-dependent'?

Note that any lump sum payment on the death of a scheme member is usually treated in isolation of any spouse or dependents' pensions and the two benefits (lump sum / pension) can be mutually exclusive of each other (hence the reason for the use of Nominated Beneficiary Forms).

Hope this helps.


Mike

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.

Andy_L

MikeJones wrote: »

and not necessarily fair -

tbh Final salary schemes have never been fair:
People with dependants do better than those without
Women do better than men
Plodders do worse than those who get regular promotions
Those who leave before retirement age do worse than those who retire in service

margaretclare

Those who leave before retirement age do worse than those who retire in service.

And that, in a nutshell, answers the impertinent question posed yesterday about why I took out my NHS pension and put it into the private sector. I did so just before I went to work in the Middle East. I couldn't have 'retired in service' because I wasn't in the service any more.

jem16

margaretclare wrote: »

And that, in a nutshell, answers the impertinent question posed yesterday about why I took out my NHS pension and put it into the private sector. I did so just before I went to work in the Middle East. I couldn't have 'retired in service' because I wasn't in the service any more.

You didn't need to "retire in service". You could have "frozen" the pension which meant it would have grown in line with inflation until you were able to take it at normal retirement age. You could then have paid into a separate private pension for your new job - chances are that it would have been better for you.

I wasn't being impertinent when I asked. I was curious as it's usually always better to leave a final salary pension where it is.

margaretclare

The 'final salary' bit didn't apply once I'd left! I've no doubt it is a good scheme for those who end their careers in a higher grade and better salary.

I would hope that nowadays people are more aware of the finer points, that there are people with the expertise to give the kind of information and advice that is available here and in other places, but was by no means available then. Few of the people I worked with had a clue about pensions or were even interested, so one couldn't get it from colleagues.

I don't think it was you I referred to as being impertinent, but the person calling himself/herself Jack Spratt.

jack_spratt_2

margaretclare wrote: »

The 'final salary' bit didn't apply once I'd left! I've no doubt it is a good scheme for those who end their careers in a higher grade and better salary.

I would hope that nowadays people are more aware of the finer points, that there are people with the expertise to give the kind of information and advice that is available here and in other places, but was by no means available then. Few of the people I worked with had a clue about pensions or were even interested, so one couldn't get it from colleagues.

I don't think it was you I referred to as being impertinent , but the person calling himself/herself Jack Spratt.

Advice was available if you willing to look in the right places and I would be interested to know were you got your advice !!! not from a IFA I bet.
You have called me insulting and then impertinent for suggesting that your reasoning was wrong .!! If you post on a public forum you must expect your views to be challenged especially when they are wrong
Yes people are more financially aware these days mainly because of more coverage in the newspapers and the power of the Internet .

EdInvestor

MC

If you received "advice" from a salesman or IFA about transferring your NHS pension to a private one after 1988, then you may have a case for misselling. This was widespread at the time. :mad:

There was a formal review by the regulator which forced companies to pay compensation in the 1990s. But not all cases were detected, and indeed people who were abroad are likely to have slipped through the net.