Pension and death

nicklad123

Hi, can anyone help out, I am a little puzzled.

My sister passed away suddenly last year, and her civil service pension went to her husband. Unfortunately he also passed away a few months later, leaving his estate to me. He had been drawing his survivor pension for about six months only. My sister had put in over thirty years in the civil service and as a result probably built up quite a substantial pension pot.
Am I correct in thinking that this pot is now effectively tipped back into the civil service coffers, or is there a possibility that I could have a claim? It would seem completely unfair that my sister's life contributions be snatched back in this way.
Any advice or experience of a similar situation would be helpful.
Thanks in advance

mania112

There should be a 5 year guarantee in play?

hyubh

nicklad123 wrote: »

My sister had put in over thirty years in the civil service and as a result probably built up quite a substantial pension pot.

Or more exactly, substantial pension rights, rather than a pension pot of money/investments.

Am I correct in thinking that this pot is now effectively tipped back into the civil service coffers

There wasn't anything to 'tip back'. Rather, the civil service pension scheme has just benefited from a pension liability disappearing.

is there a possibility that I could have a claim?

Probably not, but it will be down to the rules of the individual scheme.

It would seem completely unfair that my sister's life contributions be snatched back in this way.

She wouldn't have contributed that much to be honest - traditionally the civil service pension scheme was non-contributory for its main benefits, with just a small contribution (something like 1.5%) nominally to pay for survivor benefits.

nicklad123

Would that also apply to any voluntary contributions made?

hyubh

nicklad123 wrote: »

Would that also apply to any voluntary contributions made?

Get in touch with the administrators:

http://www.civilservice.gov.uk/pensions/helplines

Linton

nicklad123 wrote: »

......
Am I correct in thinking that this pot is now effectively tipped back into the civil service coffers, or is there a possibility that I could have a claim? It would seem completely unfair that my sister's life contributions be snatched back in this way.
....

Pensions are a form of insurance whereby those who die early subsidise those who die late. The alternative would be that instead of having a payment based on an actuarial average life expectancy everyone would need a pot sufficient to last their entire possible life. Currently one can be expected to live for about 20 years from retirement at 65. Increasing numbers of people are living to beyond 100, so a system whereby one held onto one's own pot even after death would perhaps halve the annual pension payout. Is this desirable?

dunstonh

My sister had put in over thirty years in the civil service and as a result probably built up quite a substantial pension pot.

There is no pot. She bought a range of benefits. One of which was a pension whilst she was alive and spouse/dependents pension of 50% income if she died. If spouse dies, the pension finishes.

It would seem completely unfair that my sister's life contributions be snatched back in this way.

People that die early help offset those that have a long life. The average life expectancy is then factored into the cost of maintaining the pension which is shared by pension holders and the employer.

Would that also apply to any voluntary contributions made?

The in-house AVC would have been taken at the same time as the main scheme.

nicklad123

Thanks for all the replies. All most helpful and informative!It's certainly made me re-evaluate my own position somewhat; Say for instance my wife and I were seen off at the same time, say in a car crash or similar, then all the money we have pushed into our own pension schemes via AVCs, wholly self funded personal pensions, or whatever, would essentially be lost to our beneficiaries. Hardly seems fair, does it? I think we'd be better off "putting the cash in a box under the bed" then at least we could be sure of leaving some of it behind.I fully understand the "die early-tough luck, live long-quids in" thing. it just doesn't seem to make the same sense to me any more.

nicklad123

Ooops, kind of assuming I'm not going to collect my pension and live for ever there aren;t I? Obviously if I'm going to make 110 then the pension is the best bet. (Never was much of a gambler!)

dunstonh

Say for instance my wife and I were seen off at the same time, say in a car crash or similar, then all the money we have pushed into our own pension schemes via AVCs, wholly self funded personal pensions, or whatever, would essentially be lost to our beneficiaries.

With money purchase schemes prior to retirement, the value of the pension is paid out. If you die after you have commenced the pension then it will depend on the method of income payment you use (annuity or drawdown) and the options you select.

I think we'd be better off "putting the cash in a box under the bed" then at least we could be sure of leaving some of it behind.

That would make you worse off so its not worth it.

Annie1960

nicklad123 wrote: »

Would that also apply to any voluntary contributions made?

It would depend on whether she made any nomination for a spouse or survivor when she took the AVC, I'm currently choosing my civil service AVC annuity and I get to choose whether I want a pension just for myself or whether I want to take lower payments now and choose a joint life option. You will need to get hold of the papers she filled in when she took hers, but I think AVCs are just for spouses or dependents, who need to be named on the application.

She may also have chosen a guarantee period (again, she would have to have taken a lower pension for this), and this will be shown on her application form.

If you don't have any papers, you will need to send her death certificate to the AVC company along with any probate forms you have, or get the solicitor to write to them. If she went through the open market route, her annuity may not be with the company she used for her AVC.