Widow pension refund (I have no potential widow)??

anotherdollar

I used to be a civil servant paying into the Classic pension scheme. I was told that part of my contributions would be refunded at retirement if I was not married and therefore the civil service wouldn't have to pay a pension to my widow if I died first.

Anyway, I have left the civil service and transferred my pension to the Teachers Pension Scheme. I have tried hunting out the information, but I cannot see whether I would also get a refund on some of my contributions if I have no potential widow?

It seems unfair that single people should contribute the same as a married person with a potential widow! When I die the pension automatically stops, whereas the pension scheme for a married person who dies first has to continue to paying 50% of the income until the widow dies!

Many thanks, Richard.

FatherAbraham

trelore wrote: »

It seems unfair that single people should contribute the same as a married person with a potential widow! When I die the pension automatically stops, whereas the pension scheme for a married person who dies first has to continue to paying 50% of the income until the widow dies!

Defined-benefit pensions are inherently inflexible. Remember to set that against the fact that you've pushed all the risk onto someone else to guarantee the promised income level.

Don't start asking for "fair pricing" if you live in the world of defined benefits, because if the true cost of schemes like the one you're a member of were to be made clear, there would be an armed revolution, and the ordinary, non-state workers would send all the civil servants to the guillotine.

Warmest regards,
FA

Freecall

Father Abraham is right, you can't really mix and match the two philosophies.

DC is 'fair' in the sense that you get out what you put in.

DB on the other hand wipes all that 'fairness' away and in return guarantees your outcome.

If you want reduced cost because you have no wife then logically someone with an older wife would want to pay less than someone with a younger model.

Actually, there are schemes that operate in that way but that is not where you are.

RichandJ

Whilst agreeing with the posters above re the fairness of DB schemes (especially public sector ones) I'd say the OP is one of those people for whom a TVO to a SIPP/personal pension of some sort is valid up to a year before NRD.

He might then get a better rate on his personal benefit without allowing for 5 year guarantee & spouse's pension.

I'm sure our resident expert on whether an IFA would sign this off will comment, once he's allowed to again.

mania112

trelore wrote: »

It seems unfair that single people should contribute the same as a married person with a potential widow! When I die the pension automatically stops, whereas the pension scheme for a married person who dies first has to continue to paying 50% of the income until the widow dies!

To play devil's advocate:

When you were a 20 something starting out, and the HR team tell you about a pension scheme you will be joining 'and when you die your spouse will get 50% thereafter', you probably thought that was a pretty good deal even if you weren't married at the time?

I'm not sure this is factually accurate, but most men die married - so the scheme is set up for the majority.

It isn't flexible, but if you think you prefer a single persons annuity, why not find out if you can get more on the open market (if you haven't already started payment).

It could well be possible, but what if you DO get married?

hyubh

I have left the civil service and transferred my pension to the Teachers Pension Scheme. I have tried hunting out the information, but I cannot see whether I would also get a refund on some of my contributions if I have no potential widow?

You have transferred out to a completely different pension scheme... so no.

It seems unfair that single people should contribute the same as a married person with a potential widow!

- You've benefited from two very generous DB pension schemes that the government signs a blank cheque for (there's no pension fund behind either scheme).
- You've benefited in the civil service case to tiny contribution rates.
- You've benefited from transferring between schemes on (I assume) preferential 'club' terms.

So yes... things were a bit 'unfair'

When I die the pension automatically stops, whereas the pension scheme for a married person who dies first has to continue to paying 50% of the income until the widow dies!

Realistically I can't see gratis survivor pensions existing for new members in ten years time for precisely that reason (in my view they should have disappeared in the 2014/2015 public sector schemes).

taktikback

It's not fair that they didn't give me a proper bag to carry these free gold bars...

Drp8713

Im pretty sure in the Classic civil service scheme the 1.5% contributions you pay are WPS contributions and that you are only paying for a widows pension and your pension is free

If you are single you get them refunded when you leave, but not if you are married or divorced.

I dont think any other schemes offer that so the fact you transferred out to teachers means you lost it

anotherdollar

I never realised such a question would have yielded so much venom. I was simply asking whether the RULES were the same, but thanks to those that actually attempted to answer my question rather than bang on about the financial viability and fairness of such schemes.

I will seriously look at whether paying 9.2% of my salary is actually worth it in the future!

rpc

trelore wrote: »

I will seriously look at whether paying 9.2% of my salary is actually worth it in the future!

Work out what you would get (using various returns) investing that yourself. Remember there is no employer contribution if you opt out and you should subtract the costs of life insurance (you have this as a death-in-service benefit, you will need to pay for it if you opt out).

Then work out what annuity you could buy (again use a reasonable selection of rates). Lastly, add on some fudge factor to account for the value of the guarantee (this wouldn't be necessary if you combined the worst possible return with the worst possible annuity rate).

You could also look at what things like drawdown would get you based on various GAD rates.

Then you compare your numbers against the DB scheme and see who wins. Please come back here if you do the sums - it would be an interesting exercise and people here would be able to look at the assumptions and give different ideas on the numbers you use. My gut instinct is that DB would still be better for you but I'm far less certain of it in your case compared to many other people.

The thing about defined benefits (as you may now have worked out) is that the benefits are defined. If you move out of that definition then the value decreases (early retirement, reduced life expectancy, no spouse, etc all have this impact)

Prothet_of_Doom

Get married. I have a sister, she's always wanted to meet a bloke with a decent pension, she's single available, works for a University, so probably if she dies you'd get half her pension as a widowers pension.

I can sort it. Just give me a nod.

Note: I'm going to leave my wife with sod all when I go.