Claiming deceased aunt's pension

krazyk

My aunt died a few weeks ago. Her Will has left everything to my brother and I. Her nominated executors are sorting out all the paperwork now. They have written to her pension companies to be told that they cannot transfer per pensions. It sounds like she didn't nominate anyone to pass the pensions onto. As she has no dependents and had no partner this seems to suggest her money is owned by the pension companies.

This seems wrong and was wondering if there is anything else we can do? I don't understand why there is nothing in place (by law?) that passes the pension automatically onto family or is included in her estate regardless of whether she had nominated anyone or not.

This doesn't make sense to me. So the pension companies are quids in here.

dunstonh

They have written to her pension companies to be told that they cannot transfer per pensions. It sounds like she didn't nominate anyone to pass the pensions onto. As she has no dependents and had no partner this seems to suggest her money is owned by the pension companies.

Sorry for your loss.

There is a bit of conflicting information in that paragraph. This could be down you brining in wording in an area you are not aware about or it could be confusion at their end.

1- a pension transfer is not the transaction that would be carried out on death. It would be payment of death benefits.
2 - You said pension companies. This indicates a personal pension or similar operated by a pension company (such as insurance company). These would pay the fund value to beneficiaries if the pension income had not commenced. it wouldnt matter if there was not a nomination. If the pension was in payment (i.e. income being received) then it would usually die with the pension holder unless it was within a guarantee period.
3 - The mention of no dependants and no spouse as a reason suggests it was an occupational defined benefit pension and not one operated by pension companies. With this type, death benefits tend to be paid whilst the person is employed by that company (death in service or death grant) and/or a pension income to dependent children (typically under 23) or a spouse or civil partner. If neither of those exist, then the pension ends.

This seems wrong and was wondering if there is anything else we can do?

We need clarification on what type of pension. However, these things are rarely wrong.

I don't understand why there is nothing in place (by law?) that passes the pension automatically onto family or is included in her estate regardless of whether she had nominated anyone or not.

Its not down to the nomination. That is just an expression of wish. However, the trustees always have the final say. No nomination means the trustees make the decision without knowing what the pension holder may have preferred.

It is down to the type of pension. I suspect it is an occupational defined benefit scheme....

So the pension companies are quids in here.

....But your mention of pension companies suggests it is not.

So, can you provide some clarification please.

krazyk

Thank you very much for the reply. Until we get the estate statement and paperwork from the executors I won't have any more info. I'm not a pension expert so I don't know the terminology, sorry about that. If it helps, my aunt was retired and was receiving her pensions.

The point I was making towards the end is that we are all paying a lot of money into these pensions but if you do not nominate anyone or are not married or have children then all that money "disappears". This is wrong, as in in principle, in my opinion. In this respect a savings account seems a saver bet as that forms part of our estate.

I wouldn't want my pension money going to waste like that. I've made sure I've nominated people for my pension. I really do hope everyone has done that.

dunstonh

The point I was making towards the end is that we are all paying a lot of money into these pensions but if you do not nominate anyone or are not married or have children then all that money "disappears". This is wrong, as in in principle, in my opinion.

It is wrong. That is why it doesnt work that way.

A missing nomination does not stop death benefits from being paid.

In this respect a savings account seems a saver bet as that forms part of our estate.

That is also wrong. Pensions are outside of the estate. So, avoid IHT. So, that makes pensions better than savings in most cases on that particular point.

I wouldn't want my pension money going to waste like that. I've made sure I've nominated people for my pension. I really do hope everyone has done that.

What it is looking like is that your aunt had a defined benefit pension. Not a personal pension. These were based on years of service. Not a fund value. She may never have paid a penny towards it. If she did, it would likely have been a very small amount. That type of pension buys you a range of defined benefits. It is not a fund or pot. Death benefits are spouse/civil partner or child under 23. If none of those, then the pension dies with the person.

A personal pension pays out the fund value of death. Lack of nomination does not change that. It just means the trustees know what the wish of the individual is and do not need to work it out themselves.

magpiecottage

dunstonh wrote: »

Pensions are outside of the estate. So, avoid IHT. So, that makes pensions better than savings in most cases on that particular point.

Unlike executors, trustees also do not have to wait for probate - because the money they hold never legally belonged to the deceased. So they can pay out more quickly.

However, if no nomination was made it is normal to follow what the will dictates - and that can mean waiting for probate.

So whatever form of pension savings you have, a nomination of beneficiary is a good move.

However, if it is a personal pension, that is usually indicated in the application.

It is not changed by an change of marital status or change of will, though.

atush

The main thing is, the type of pension. Wbich the OP still hasn't said.

If it was a DC pension, and she bought an annuity, and there was not guarantee period remaining, it dies with her. If a DB pension, and commenced, and no spouse or dependents, then it dies with her.

If it was a DC pension in Drawdown and any is left, you or some other relative will inherit it. But given she had been in payment I think this option is VERY unlikely as until recently most went for annuities.

your ranting about pensions is ill informed and pointless. These days, with the options available for DC pensions, relatives would inherit something. Pensions are for the life of the pensioner- to keep them in comfort. Not to leave to some non nuclear family.

Oxtonite_62

My partner has 3 small personal pensions with CIS (recently taken over by Royal London). He contacted them to take 2 as a lump sum this year and the third he has postponed until April 2016.

He then asked about nominating me as his beneficiary and was told he couldn't as we weren't married and I'm not financially dependent on him. However, they did say if we had a joint bank account then he could nominate me.

He contacted Pensionwise and they believe he has been given the wrong information by CIS.

On the advice of Pensionwise, he has emailed CIS and asked for this information in writing.

He is awaiting their reply!!

xylophone

I find the reply very odd - someone I know has nominated a nephew as the beneficiary of a SIPP with no problem.

molerat

Possibly 2 different nominations being talked about here - dependant / spouse and death / 5yr guarantee type payment.

Goldiegirl

krazyk wrote: »

Thank you very much for the reply. Until we get the estate statement and paperwork from the executors I won't have any more info. I'm not a pension expert so I don't know the terminology, sorry about that. If it helps, my aunt was retired and was receiving her pensions.

The point I was making towards the end is that we are all paying a lot of money into these pensions but if you do not nominate anyone or are not married or have children then all that money "disappears". This is wrong, as in in principle, in my opinion. In this respect a savings account seems a saver bet as that forms part of our estate.

I wouldn't want my pension money going to waste like that. I've made sure I've nominated people for my pension. I really do hope everyone has done that.

A pension is to provide you (and in some cases a spouse) with an income for the rest of your life - not to provide random relatives with an inheritance.


The money doesn't disappear when a person dies - it's been SPENT to provide the income for the remainder of the person's life.


If you start drawing the pension when you are 55 and live for another 50 years, it could be said that you have had value for money. If you die at 56, then maybe not - but the money has still been spent providing you with the income for the rest of your life, even if the rest of your life was 1 year!


If you

neilvw

Oxtonite_62 wrote: »

My partner has 3 small personal pensions with CIS (recently taken over by Royal London). He contacted them to take 2 as a lump sum this year and the third he has postponed until April 2016.

He then asked about nominating me as his beneficiary and was told he couldn't as we weren't married and I'm not financially dependent on him. However, they did say if we had a joint bank account then he could nominate me.

He contacted Pensionwise and they believe he has been given the wrong information by CIS.

On the advice of Pensionwise, he has emailed CIS and asked for this information in writing.

He is awaiting their reply!!

Lump-sum death benefits can be nominated to anyone - they don't have to be financially dependent on the deceased, or interdependent with them. The trustees do have the final say in who gets what, however.

Some older CIS policies had valuable guaranteed annuity rates. I imagine Pensionwise will have asked about that, but if they do apply it could be worth hanging on to the pension pots, even if small.