Spouce's Pension Gone ?

Jason_343252465

Hi,
My Father -in-law died recently (17/7/15) , he had a small pension with Legal and General. They informed us that his wife would receive a small pension or a one off payment of 7K.
Unfortunately she also died on the 29/7/15 - They are now informing us as the next payment date wasn't until 11/8/15 the pension is now cancelled and nothing will be paid to either of their estates.


Does anybody know if this is "right" ? seems a bit harsh to me that had she had lived another 13 days she would have received this payout. I appreciate that neither of them are with us now so the pension should be cancelled but I get the feeling they are just trying to get out of paying anything and I'm no pension expert...Should I let it go and accept what they say or are they just trying to pull a fast one.


Jason

Drp8713

If she was due the payment then it should be due to her estate.

It may just be a few days worth of pension though as the £7k I assume would have been a trivial commutation payment?

FatherAbraham

Jason_343252465 wrote: »

Hi,
My Father -in-law died recently (17/7/15) , he had a small pension with Legal and General. They informed us that his wife would receive a small pension or a one off payment of 7K.

Which option was chosen? A lifetime income, or a one-off sum?

Jason_343252465 wrote: »

Unfortunately she also died on the 29/7/15 - They are now informing us as the next payment date wasn't until 11/8/15 the pension is now cancelled and nothing will be paid to either of their estates.

Does anybody know if this is "right"? seems a bit harsh to me that had she had lived another 13 days she would have received this payout. I appreciate that neither of them are with us now so the pension should be cancelled but I get the feeling they are just trying to get out of paying anything and I'm no pension expert...Should I let it go and accept what they say or are they just trying to pull a fast one.

It is highly unlikely that they are trying to pull a fast one. If the terms and conditions of the pension for your mother mean that no payment is due unless the beneficiary is alive on a payment date, then clearly what has happened is correct.

If you need to resolve this in order to achieve peace of mind, I suggest you write and ask for an explanation of the precise circumstance which caused no payment to be due.

Warmest regards,
FA

jayship

Hi Jason
May I suggest you get in touch with the Pension Advisory Service. They are very helpful and the advise is free.
Phone nos. 08456012923
02076302250

dunstonh

An annuity can be set up with or without proportion. Without proportion would mean that no payment is made in the month of death. With proportion means that a proportional amount is made. The with or without overlap could be in play here too.

Does anybody know if this is "right" ?

Could well be if its without proportion.

It could also be that they were within the guarantee period and whilst the spouse benefits from that on death but that would cease on the death of the spouse. If the pension didnt have overlap and was proportional and payable in arrears then the amount would cease.

seems a bit harsh to me that had she had lived another 13 days she would have received this payout.

Not really as the annuity rate is higher if its without proportion. So, they would have had a higher income whilst alive.

My guess, if it is an annuity, is that it was set up without proportion and they just got unlucky with timing on death.

Also, if the insurer was taking a gamble and offering her the option of commuting future income for a lump sum and that was not completed before death then the insurer wins. If it had been completed and then she died, then the insurer would have lost.

So, it could be quite a few things but the scenario you mention is quite normal with the right options selected.

Jason_343252465

Thanks for the replies and views above. I don't know how the pension was set up, she was going to go for the lump sum but we didn't get the forms back in time (as her husband had just died, there was just too many other things to sort out first).


I think their argument for not paying is that a pension payment was made on the 11/7 to cover upto 10/8 - has he died in between these days they had already paid for this period. Next payment would have been 11/8 to her (the lump sum) but she died before reaching this date, so no spouse pension/lump sum needs to be paid.


I'll try the pension advisory service tomorrow, I suspect nothing will be paid but it just enforces my views that pensions are a waste of time and the only one's who benefit from them are the pension providers !!

dunstonh

she was going to go for the lump sum but we didn't get the forms back in time

And that is the problem.

but it just enforces my views that pensions are a waste of time and the only one's who benefit from them are the pension providers !!

I appreciate your loss but that is just a silly point of view and totally wrong.

jamesd

Jason_343252465 wrote: »

she was going to go for the lump sum but we didn't get the forms back in time ... I think their argument for not paying is that a pension payment was made on the 11/7 to cover upto 10/8 - has he died in between these days they had already paid for this period. Next payment would have been 11/8 to her (the lump sum) but she died before reaching this date

I think it's not so much the lump sum as they didn't know that she was going to do that because they hadn't received the form. Rather, I think that absent some change the normal option is to continue receiving an income as a spouse for the rest of the lif of the spouse. And she hadn't changed that normal course by saying she preferred the lump sum using the form.

Jason_343252465 wrote: »

it just enforces my views that pensions are a waste of time and the only one's who benefit from them are the pension providers !!

It's how annuities can work but it's been ten years since people had to buy an annuity with pension money. These days it's possible to just keep a lump sum in the pension and draw an income from that. The spouse or anyone else can then inherit that money on death of the pension holder. No automatic vanishing act, it just stays there for inheritance. Of course this relies on investment returns so it's not guaranteed that the money will last for a whole life if it's drawn at too high a rate. So options like increasing the state pension by deferring it can be useful at around state pension age, with some annuity buying in the 75-85 sort of timeframe as well if more certainty is desired. Or not, it's up to each person to choose.

PensionTech

but it just enforces my views that pensions are a waste of time and the only one's who benefit from them are the pension providers !!

That’s throwing the baby out with the bathwater somewhat.

The point of a spouse’s pension is to make sure that when someone dies, their partner – who is usually financially co-dependent with that person – is provided for during their lifetime. If the spouse dies as well, then the rules aren’t written to then also provide for anyone who would benefit from her estate – that’s not what the pension is for in the first place. The price of a spouse’s pension takes into account that there is a certain probability that the spouse will die soon after the original member and therefore the pension will stop being payable; otherwise, if providers were held to pay to her estate whatever might have been payable to the spouse had she lived longer, the cost to purchase a spouse’s pension would be an awful lot higher. There are other products available for the purpose of passing money on like that, of which drawdown is one, as jamesd says.

The fact that, in this case, trivial commutation was an option is just a coincidence. Usually the spouse would receive regular payments until she died, and in this case, that wouldn’t have resulted in any payment for her at all. But because the benefit was below a certain level, she was offered the option to trade it all in for a one-off lump sum. As dunstonh points out, this is a gamble; the conversion to a lump sum is based on a prediction about how long she would live. If it had been paid out, but she had then lived for less time than expected (as clearly would have been the case here), then yes – the pension provider would have lost money. And vice versa.

But she didn’t select the option before she died – which is unfortunate, but a) isn’t the provider’s fault and b) indicates that she wouldn’t have had time to actually benefit from the payment personally before she died anyway. Who can spend £7k in a couple of days? (Don’t answer that; my mind’s already racing with all the things I would do.) So the provider didn’t pay the money, because she didn’t ask them to.

What you’re really asking here is why the pension provider doesn’t have to pay the money to the estate so that her beneficiaries can have a share after her death – not so that she could have enjoyed it herself. Which is probably a little bit unreasonable, and doesn’t really entitle you to have a pop at the entire pensions industry and dismiss it as a waste of time.

And FYI, I don’t have any vested interest in selling pensions to you. I’m not a provider; I work in technical services and have no interest in sales. I have, however, worked in pensions for long enough to understand how they work and see why they are a very valuable tool to help people stay afloat in their old age.

atush

Jason_343252465 wrote: »

I'll try the pension advisory service tomorrow, I suspect nothing will be paid but it just enforces my views that pensions are a waste of time and the only one's who benefit from them are the pension providers !!

Thinking pensions are a waste of time, because you and she failed to fill out and send the forms is just wrong.

If you follow the rules of the scheme, and do things on time, 7K would have been payable. So you would have benefited not the provider. I am afraid not filling them out was your waste of time.

I under stand Why the forms were not filled out in time, but that is not the providers fault.

mania112

within the 12 days after her husband died and before she died, she made this decision?