Father took 1 year of Private pension

Paulie245

Hi All, I am helping my mum sort my late fathers pension and probate. And was hoping for some advice please.

My Father was a good man and he had a final salary pension with joint benefits to look after my mum after he passed away. at 50%

He only took just over 1 year of his pension before he unfortunately passed away. So the private pension company advised on the telephone that my mum would probably be guaranteed up to 5 year of his monthly normal pension amount 100%.
Plus a Lump sum up to 5 years of benefit.
The exact words in the pension documents are: if you die within 5 years a lump sum equal to the value of the balance of the 5 year scheme pension payment will be paid.

After chasing a few times, we found out that none of this would happen, and mum would only receive 50% of the pension. Apparently the trustees decide this, and said NO, we do not have this in writing yet...

Do we have a right to challenge the pension company? as we have it in writing that the 5 year balance would be paid?

Thanks

Paulie

magpiecottage

I suggest you take your enquiry here.

hyubh

Paulie245 wrote: »

Apparently the trustees decide this, and said NO, we do not have this in writing yet...

Do we have a right to challenge the pension company? as we have it in writing that the 5 year balance would be paid?

First and foremost, you need to get a copy of the scheme rules. These may well confirm that the additional benefit is indeed discretionary... but you need to know either way. Further, even if they do confirm a discretionary basis, the wording of the rules here will hopefully suggest the general terms under which the additional benefit may be refused. If they do, then the trustees will be bound to have made a decision, in good faith, according to those terms. If they have not, your mother will have a right of appeal, in the first instance to the trustees themselves, and ultimately to the Pensions Ombudsman (your mum must complain internally first however).

If the trustees made their decision according to the scheme rules, then whatever the administrator (erroneously) claimed previously does not overrule it. However, in principle the provision of erroneous information may suggest (limited) compensation is due. To see what I mean (including the ‘limited’ part), have a read through some of the Ombudsman’s decisions, which are all online (https://www.pensions-ombudsman.org.uk/our-decisions/).

Paulie245

Thank you so much for the help, Maggiecottage and hyubh. I spoke with the pension company and they seemed to think we do not have this benefit. Seems pretty standard from what I have read. I really think widow's should be looked after if their spouse dies very early in retirement. I sent the company a copy of my fathers personal benefit statement which has the wording above. lets see how this goes before I take this further.

Thanks again

P

jem16

Paulie245 wrote: »

Thank you so much for the help, Maggiecottage and hyubh. I spoke with the pension company and they seemed to think we do not have this benefit.

What final salary scheme was your father a member of?

xylophone

There's an example here

http://www.btpensions.net/125/162/death-in-retirement

"Within five years after retirement (or drawing your pension)
If you die within five years of your pension starting a lump sum will be paid to your Spouse or Civil Partner or other beneficiaries. It will be equal to the further instalments of pension (excluding any pension increases) that would have been payable if you had survived until the end of the five year period.

In addition, the Spouse or Civil Partner will receive a continuing pension. This is normally equal to one half the pension that you received at the time of your death. It may be lower because you chose to contribute for lower benefits."

And here http://bma.org.uk/practical-support-at-work/pensions/faq-death-after-retirement

I must say, if the OP's late parent's pension was the same type, the situation seems pretty clear cut.

As he says, he can only wait for an explanation in writing from the Trustees.

jamesd

Just to be clear, can you confirm that they are paying your mother monthly income payments at 50% of the value they were before his death and will continue to do this?

If so, she needs to find out about what happens if she lives with or marries another person. For some schemes this will cause the spousal pension payments to stop.

Paulie245

Thanks xylophone that is indeed very similar to what is written in a pension personal statement. It does say that this is not a certificate of benefits. So assume it is still up to the trustee. To decide.

Thanks James that is what the scheme is 50% to mum. I will definitely look into that as that is important.

Jem16 - it is an American company. Don't want to name yet as they will get back to be in 5 days.

Does anyone know what happens to a joint benefit pension after the 2nd beneficiary passes away? I read something about 55% tax however unsure as this has been passed between spouses already.

kidmugsy

Paulie245 wrote: »

Does anyone know what happens to a joint benefit pension after the 2nd beneficiary passes away?.

It finishes. That's the flip side of the fact that it'll pay out as long as she survives, even if that is to age 110.

jamesd

The 55% tax is something that applies to personal pension or work defined contribution pension pots until 6 April 2015, not defined benefit pensions like the one here.

With defined benefit pensions like this one the money simply stops coming, unless there are children under age 25, when in some cases those in full time education might continue to receive something, or under 18 when it's more likely that something might continue to be paid. The details depend on the rules of the specific scheme. There's also a chance that there would be a final lump sum payment of some smallish amount.

If it was an annuity that had been purchased the payments would simply stop after the second death, if it was a dual life type. Single life ones are more commonly bought and those stop after the first death, though it's pretty common to also buy a guarantee that they will pay out for at least five or ten years after purchase.

For the defined contribution/personal pension pots that are more common these days all that happens after death is that someone inherits the money, if it hasn't been used to buy annuities. From 6 April 2015 that's either tax free or taxed as income for whoever takes the money out, the 55% tax on it is being abolished unless a lump sum is taken when the person died after age 75, when it's now 45% instead.

atush

Don't want to name yet as they will get back to be in 5 days.

Why not? Do you think they will penalize you? Not likely.

If you say which company someone might know some facts.