Stand Alone Widow's Pension

Ageing_Disgracefully

Hi


My wife and I will be retiring in the next 12 months.


Amongst the calculations we have been doing we have looked at how each of us will be left financially if the other passes away.


It turns out that my income as a widower would be around £2500 (before tax) more than my wife would get as a widow. Is there such a product as a stand-alone widows pension so that we could even out our finances in the event of the other passing away, and if so is it likely to be cost effective?


For information, I am 58 and Mrs AD is 59.


Any suggestions gratefully received.

julieu

You need to take into account that widows pension is only paid for 52 weeks and if you receive some of the other benefits this impacts on them as well.

Ageing_Disgracefully

Sorry for any confusion. We won't be eligible for any state benefits, other than state pensions in a few years time.


I was merely wondering if there are any specific policies or products out there which would provide Mrs AD with an extra £2500 per year in addition to our current pensions if I end up going first.

Mojisola

If one of you dies before the other reaches SPA, you can claim Bereavement Allowance but, as julieu says, it only lasts 52 weeks.

https://www.gov.uk/bereavement-allowance/overview

SeekTruth

Ageing_Disgracefully wrote: »

Hi


My wife and I will be retiring in the next 12 months.


Amongst the calculations we have been doing we have looked at how each of us will be left financially if the other passes away.


It turns out that my income as a widower would be around £2500 (before tax) more than my wife would get as a widow. Is there such a product as a stand-alone widows pension so that we could even out our finances in the event of the other passing away, and if so is it likely to be cost effective?


For information, I am 58 and Mrs AD is 59.


Any suggestions gratefully received.

Congratulations on performing the calculations. But is the question relevant? If you predecease your wife then would she actually have a shortfall in terms of income compared with requirements? Similarly, if you survive your wife then would you have a shortfall in terms of income compared with requirements?

If you really do want/need to boost your wife's income then the ways I can think of are:
1. Pay into a pension for her (whether Stakeholder, Personal or SIPP I'll let others comment on). Though once she's retired she'll be limited to £3600 per year contribution.
2. Defer taking state pension. As she will reach state pension age after April 2016 I don't think the benefit of deferring has been finalised: last I saw was a suggestion of 1% increase for every 9 weeks delay.

Or, perhaps extreme, have you considered getting divorced and arranging pension sharing orders to even things up?

Ageing_Disgracefully

SeekTruth wrote: »

Congratulations on performing the calculations. But is the question relevant? If you predecease your wife then would she actually have a shortfall in terms of income compared with requirements? Similarly, if you survive your wife then would you have a shortfall in terms of income compared with requirements?

If you really do want/need to boost your wife's income then the ways I can think of are:
1. Pay into a pension for her (whether Stakeholder, Personal or SIPP I'll let others comment on). Though once she's retired she'll be limited to £3600 per year contribution.
2. Defer taking state pension. As she will reach state pension age after April 2016 I don't think the benefit of deferring has been finalised: last I saw was a suggestion of 1% increase for every 9 weeks delay.

Or, perhaps extreme, have you considered getting divorced and arranging pension sharing orders to even things up?

My wife won't really have a shortfall of income if I pre-decease her. It just seems a bit unfair that I would have a higher income if the positions were reversed.


We'd considered paying into a separate pension, but the amount needed to generate that £2500 takes a fair chunk out of our savings.


My thoughts were that, on average, she is likely to live a couple of years longer than me. If it works out like that then we're only talking about £4K after tax. Of course I may shuffle off my mortal coil tomorrow and she may require £2500 per year for another 40 years. Far more likely than that scenario is that she goes before me and this wouldn't be required.


As for deferring state pension, that is something worth considering when the full details are known. It has been a very good way of increasing pension income, but I understand that the increase will be far less generous in future.


As for the divorce suggestion, I think that I would certainly predecease Mrs AD by some margin if I ever suggested that - regardless of any financial implications.

FatherAbraham

Ageing_Disgracefully wrote: »

I was merely wondering if there are any specific policies or products out there which would provide Mrs AD with an extra £2500 per year in addition to our current pensions if I end up going first.

Insure your life for about £100k, in favour of your wife. Then, when you die, the £100k can be used to purchase a lifetime annuity of about £2500.

Warmest regards,
FA

Ageing_Disgracefully

I had intuitively assumed that an open ended life insurance policy would be prohibitively expensive, but will now do some research.


Thanks

mgdavid

Ageing_Disgracefully wrote: »

..... It just seems a bit unfair that I would have a higher income if the positions were reversed.......

you might need the extra income to pay for staff

Ageing_Disgracefully

mgdavid wrote: »

you might need the extra income to pay for staff

You must have missed the bit where I said that I was married. Unfortunately that makes ME "the staff" as far as Mrs AD is concerned.

FatherAbraham

Ageing_Disgracefully wrote: »

I had intuitively assumed that an open ended life insurance policy would be prohibitively expensive, but will now do some research.

I was a bit imprecise. As you both age, the cost of insuring your life will rise, but the cost of her annuity purchase will fall, so there's a bit of automatic hedging going on. The sum you insure your life for can decrease over time.

Annuities and life insurance are two sides of the same coin.

Warmest regards,
FA