Pensions for wife

Mif_2

Are there any products around that would be better value than an ordinary pension by only paying out if I pre-decease my wife? The reason is that I have a career average, defined benefit scheme that will pay out close to 100% of average pay if I retire at state pension age, but only pays 37.5% as a widow' pension - As my wife's 7 years older I'd expect to outlive her, but she can be [STRIKE]stubborn [/STRIKE] determined when she wants to be:D.

Some options that I'd thought of:

1. Additional contributions to my pension - seems to be buying quite a lot of benefit that I don't need. I'd get 13p/year for each extra pound put in, which would be 5p/year for her. Could take this as a lump sum on retirement, and invest outside a pension.
2. Separate pension for her - presumably could ensure constant income, but pot would need to be quite large to mitigate against me dying before she retired
3. Life assurance - this (and death in service benefits) is how we're covering it at the moment, but presumably may become prohibitively expensive as I get older.

Assumptions (figures in present value):
Earning: £25,000 (me), nothing (her)
Age: 32 (me), 39 (her)
Expected pension: £25,000 while I'm alive, £9,500 as a widow - would really like to get towards £15,000 - am I dreaming to think I could acheive this with contributions around £50 a month?

kidmugsy

I've got two small uncrystallised pensions. As I understand it, if they are still uncrystallised when I die my wife will receive all the capital free of tax. Not only that, but she should get it quickly because it won't form part of my estate and so won't have to await probate.

atush

So a pp for you uncrystallised is a good idea, esp if you have children the money would go to if she dies first.

Or, a PP for her, and have her not draw it until you die. which would mean it would have a huge amt of time to grow as obv you are living forever lol. And if she predeceased you it would go 100% to you?

Mif_2

Thanks, looks like that might be the way to go - presumably with relatively small contributions I need to be looking for a pension with low fees, and could invest in something reasonably risky over that time period. Any pointers about where to start looking?

It seems that if it's only to be crystalised after one of our deaths, it doesn't really matter which name it is in.

kidmugsy

Mif wrote: »

… to be crystalised after one of our deaths, it doesn't really matter which name it is in.

So fall back on "what ifs?". If you changed your minds and wanted to crystallise while you are both still alive, whose name would it be better in then?

atush

Well, your wife has a personal allowance which shelters 10K of income from tax. So it would make good sense to use this by PP (as state pension won't use all of it esp if she has less than the full basic SP) or at least you could put unwrapped investments in her name.

So this leaves me leaning towards a Pension for her, but if she doesn't work she can only put in 2880 per year, which is grossed up to 3600 by TR. So hop on it.