After death spouse/partner pension choices

PennyForThem_2

My husband died 18 months after ending work.

He had a private pension (standard Life) and a Teachers pension (TP) well as state pension. As a widow I get some of both and a lump sum from TP.


I have a state pension which is deferred as I still work. Yet I don't have any choice as to TP or SL pension to defer which I would do in a trice.

Why is this? Many women will be working after 60 and really really don't want to pay the extra tax on an income that while working they could do without - rather defer like the state pension until it is wanted.

How would I campaign to get this changed?

CLAPTON

it would seem reasonable that if a widows pension is not needed, then it should go back into the pot to help people in a more needy situation

casey_junior

As Ghandi would say, "You can cure need but you can't cure greed"

NAR

CLAPTON wrote: »

it would seem reasonable that if a widows pension is not needed, then it should go back into the pot to help people in a more needy situation

casey_junior wrote: »

As Ghandi would say, "You can cure need but you can't cure greed"

Advice was asked for, not your tuppence worth! :mad:
OP is trying to manage not only her own finances, but those in future who may find themselves in similar circumstances!

dunstonh

Yet I don't have any choice as to TP or SL pension to defer which I would do in a trice.

The decision on death benefits on the SL is made when the pension is taken. There are various ways you can take the income and what death benefits you wish to include. Your huband made the choice when he commenced the pension. That was the time to discuss such issues.

defined benefit schemes pay a range of defined benefits. You are effectively buying those benefits each month and its a take it or leave it selection basically.

How would I campaign to get this changed?

For money purchase schemes there is nothing to campaign on as the choice is there. In your case, the wrong choice was made.

For defined benefit schemes, it is up the trustees of the individual schemes what they want to offer. Whilst on the one hand deferment may save them a very small amount of money, the administration, actuarial costs and increased liability (you may want the lump sum out at the "wrong" time for the scheme) would probably end up costing more. That would mean lower benefits or increased employee costs. We dont need anything else putting pressure on defined benefit schemes to encourage more closures.

atush

You could always put the extra income you do not need now, into a personal pension (or your current one) and therefore save on tax.

Ignore Claption's advice to give away YOUR money. If he wishes to donate to widows and orphans he can use his own excess salary;-)

xylophone

As Atush says, you could consider additional contributions to your current scheme if you have one.
You might consider a SIPP particularly if you will have secure income of more than £20000 per annum on retirement.
http://www.hl.co.uk/pensions/sipp/what-is-a-sipp - some information here. Income Drawdown Plans - The Pensions Advisory Service (TPAS)
Don't forget to use your ISA allowance as income from ISAs does not count against age allowance.

PennyForThem_2

thanks for the advice -I will consider adding to personal pension as I already buying added years to my main employer pension.

And yes, SL pension - probably did make the wrong choice - accept that!

gadgetmind

PennyForThem wrote: »

thanks for the advice -I will consider adding to personal pension as I already buying added years to my main employer pension.

That does seem well worth pursuing, and there are some very simple routes to starting a pension that you only intend to keep paying into for a short period, and some pretty non-volatile investment funds.

With all these various pensions, are you into higher rate tax? What is your tax bracket likely to be after you retire? Sorry if this seems personal, but this is really a tax play rather than a long-term pension issue, so it's very relevant.

jamesd

For your possible personal pension you'd now have the option of using income drawdown. That's been available for a few years now. In this case you don't buy an annuity and 100% of the pension pot is inheritable without tax by a spouse. Income comes from the investments within the pension, capped by something called the GAD limit. Because it provides a 100% spousal pension it can often be a good idea to use this approach. On death without a spouse there's a 55% tax charge before inheritance by a non-dependent. Which still beats losing 100% of it in an annuity.

One interesting use for drawdown is to take a tax free lump sum and income from a pension pot every few years and recycle the lump sum (optional) and income into a new pension pot to get a second chunk of tax relief. Repeat indefinitely. It's of particular benefit for higher rate tax payers and/or with salary sacrifice schemes.

PennyForThem_2

yes gadetmind - all this has rocketed me into a higher (40%) tax band which is why I would have liked choice.

My salary is just below the threshold o 40% until changed circumstances - which is why I would have liked choice to defer as per state pension (which is deferred). Now I am definitely in the 40% bracket. I probably am going to owe tax this financial year - luckily I have the capital for rainy day to be able to cope with this.

As an aside, anybody thinking of funeral plan - do consider seriously. I am going to do this in next month or so as I know when I die my 'estate' is going to be tied up and funerals are costly (although can be offset against the deceased's estate lol) and at least my surviving children won't have to worry about finding the funds.

Learnt so much through death......


(and yes, I know I am in a fortunate position unlike many who are relying on state pension. )