match-making and pensions

kidmugsy

There must still be lots of single people coming up for retirement who are in defined benefit schemes. If two were to be matched and married, they'd each gain, I presume, by an extra half-pension if the other dies first. It could work rather well as long as they thought they could exist amicably in the same house. I offer this idea free as an entrepreneurial possibility. Happy New Year.

slickric1234

i pondered the other day if 2 rich old men could sham marry each others great grand daughters to avoid inheritance tax and possibly give each others grand daughter a pension 4 life

ukjoel

What about two old rich men just marrying each other.

Imagine us all sitting in our moneysaving corner of the old age home.

Whats to stop two savvy old men (or women) doing this.

Obviously wills would need to be rewritten so only benefit was pension but I can see this happening.

I can also see a few Romanian and Bulgarian carers being brought in by families to take care of and marry old Uncle Albert to avoid them paying big care home fees and the will being written so on top of minimum wage she picks up a spouses pension for life when the old chap passes away. (Probably with a smile on his face).

hugheskevi

i pondered the other day if 2 rich old men could sham marry each others great grand daughters to avoid inheritance tax and possibly give each others grand daughter a pension 4 life

Note that some schemes have rules to cater for this, for example, this link says:

Please note that we reduce the pension if the dependant is more than 12 years younger than the member.

Similar rules exist in other schemes, I've seen examples where something like a 2.5% reduction for each year in excess of 12 year age difference is applied, up to a maximum of 50% reduction. So the great grand daughters might only get a 25% survivor benefit, which with inflation caps and the difference between RPI/CPI and earnings over time will erode the value of the pension.

So it would work, but only partially (depending on scheme rules):)

What about two old rich men just marrying each other.

Schemes can exclude pension accruals prior to 2005 from civil partner/same sex marriage survivor benefit entitlement (public service pension schemes tend to use 1988).

If it was two very similarly aged men, then the expected value is fairly small (as they will probably die within a fairly short space of time, limiting survivor benefits). So this would be better as an insurance arrangement against early death and surviving to a very old age.

Best to stick to opposite sex marriage for highest benefits

jamesd

If single they can investigate whether it would be beneficial to transfer out. There's a low chance that the survivor benefits are sufficiently generous to make this improve the situation of a single retiree who'd get a transfer value to cover that benefit as well as their own income.

If single and with medical conditions that restrict life expectancy they would have a higher chance of being better off, though whether they would be better off would depend on just how much reduction in life expectancy there is.

bigadaj

Interesting ideas and all slightly more sensible than Norman tenbitt trying to marry his son, though to be fair I think he was more after avoiding inheritance tax than pension preservation.

jamesd

Baron Tebbit didn't try to marry his son.

He speculated that future changes to the law might allow mothers to marry their daughters and fathers to marry their sons, with avoiding inheritance given as the putative reason, though the actual reason was to suggest that a law to allow those eligible for civil partnerships to also be eligible for marriage shouldn't be passed.

He could get more creative with his family relationships and marry an ex wife's daughter, which is legal under current law.

grey_gym_sock

"more sensible than norman tebbit" - that's what i call a ringing endorsement!

atush

Are married couples required to cohabitate to receive spousal pensions? Lots of married couples live apart. Work, seperation w/o divorce etc.

kidmugsy

atush wrote: »

Are married couples required to cohabitate to receive spousal pensions? Lots of married couples live apart. Work, seperation w/o divorce etc.

I don't know; I suggested cohabitation just in case pension schemes have terms to defend themselves from sham marriages.

They could hardly cry "sham" if our chums shared a house, at least for some reasonable length of time. An alternative wheeze that occurs to me is that one chum keeps a house in Britain and the other sells up and buys in France or wherever. They can then claim that one is a principal residence and the other a "holiday home". It would need rather careful spying on them to establish whether they were often in the same house together.

Freecall

I wonder how many couples with holiday homes are claiming that they have separated and each have single occupancy in order to avoid paying full Council Tax now that the relief for second homes has been removed?

But this is getting all very complicated, whether to claim you spouse is your spouse or not.

Hey, I have just realised that I have spotted an opportunity for a new job (or profession as I like to call it) as a Spousal Tax & Inheritance Fiddling Advisor (STIFA).

Do you think that the FCA will want to regulate me?