Pension advice please

p55boy

I currently have a personal pension which I started when I was about 19, I am now 45. Due to health reasons the chances are I may well not survive to retirement age.
My question is what's the best thing to do? Is it possible to transfer my pension to my wife for instance? I believe that should I not survive my pension provider will only honour 50% of the pension value to my wife, hardly seems worth continuing to pay......
Thanks for any input

jem16

p55boy wrote: »

Is it possible to transfer my pension to my wife for instance?

No it isn't.

I believe that should I not survive my pension provider will only honour 50% of the pension value to my wife, hardly seems worth continuing to pay......
Thanks for any input

What kind of pension do you have? From your description it sounds like a defined benefit pension. If so it would be very foolish not to continue to pay in as what you would get back would be far greater than what you will pay in.

If it is DB, it is also likely to have a death in service lump sum payment.

atush

As said tell us more abt your pension.


If you have a Money purchase pension (which it would be if a PP) then if you die before you take the pension, your wife doesn't get 50% she gets the lot- as a lump sum outside your estate.


If you have started taking it (ie at age 55) then you have a few options. If you go for DD over an annuity, again she would inherit 100% of the pot- if she leaves that pot invested for her own pension (this is how you transfer it to her).


If you buy an annuity, make sure it is an impaired life annuity. And make sure you pay for a spousal pension at that time (or she could be left with nothing). I would not rec an annuity in your circumstances perhaps but there are things we don't know here.


If you (before age 55) are so ill that you are not expected to live a year or more, then you could access all of your pension. Then you and she could save or spend the money as you wish.


Make sure, if you haven't already, you have filled out your form that says who you want to receive your pension (known as an expression of wishes form).


As for your wife, does she have a pension in her own name? If not does she work? Even if she doesn't you can set one up for her. Paying in up to 2880 per year which is grossed up by tax rel to 3600.

p55boy

It is just a personal pension with the Pru. Unfortunately I'm unable to find what type of pension it is called on the paperwork anywhere.
I will call them & ask for the form mentioned.
It does mention they do have discretion on who to pay a lump sum to upon death before retirement.
My wife has a small company pension from when she worked.

On the assumption I will not survive to retirement would it be best to a) continue paying my pension & let my wife take the lump sum b) freeze my pension payments & put the money into a pension in my wife's name?
Thanks & apologies if I'm a bit vague on what type of pension I have

opinions4u

Ask the Pru what options you have.

Then post them on here for others to assess.

At the moment there simply isn't enough information. But you are right to focus on this at a difficult time.

jamesd

We really need to know more about just what you have with Pru. It's not going to be what is normally meant by a "personal pension" these days because those didn't exist at the time you took this out.

You would normally tell them who to pay the pension pot to using an "expression of wishes" form. They would then normally follow that wish. They are not compelled to because compulsion would place the pension pot within your estate for inheritance tax, while the discretion keeps it outside. that also means it's not subject to probate delays. The discretion not to follow your wish would normally be used in cases like old wishes after say remarriage and children with the new wife.In such a case they would be likely to prioritise the needs of the children because that's usually what parents want. Easy enough to avoid giving them that cause to have to decide by updating the expression of wishes as circumstances change. If you specifically don't want some financial dependent provided for, be explicit about that choice as well.

The following probably doesn't apply to what you have now but it describes the standard options for any new personal pension that you might choose.

For a standard personal pension that you could start today your wife would inherit 100% of the pension pot if you died before taking income or a lump sum from it. She'd inherit 100% of the remaining pot into a pension pot of her own if you took an income with income drawdown. She'd inherit 45% of the pension pot if you took an income with income drawdown and she wanted it outside a pension. If you used a pension pot to buy one or more annuities instead of using income drawdown she'd get whatever the terms of the annuities you purchased say she'd get, which could be anything from nothing to 100%.

For your situation it seems possible that a "scheme pension" would be most appropriate. These take the life expectancy of the person taking the pension income into account and allow drawing more income than standard capped drawdown, while still leaving a pension pot available to be inherited by a spouse.

A standard personal pension today also provides you with 100% of the pension pot value if you are diagnosed with a medical condition where your life expectancy is less than a year, in the opinion of your doctors. Assuming that you have not started to take an income yet. You could simply give this to her.