39 yr old husband terminally ill. Pension option?

Beckymarshall07

I'm hoping someone might be able to help me. My husband is terminally ill. He has been with his current employer since he was 22 and he now 39. He pays into a final salary scheme through his employer. I spoke to a financial advisor last week about his financial affairs and he suggested looking into a transfer value. Having done a bit of digging online I understand basic principles of transfer value but I don't understand what this would cover (what he has paid into his pot to date and beyond) The reason for potentially looking into this as an option as opposed to terms and conditions in a death in service payments is that a transfer value (if he was eligible?) would give him access to funding to pursue any private medical treatment (if I've understood terms and conditions of a transfer value correctly?? I'm keen to understand what options maybe through a local government pension scheme. The pension scheme is administered through LGPS who were very dismissive when I rang for information and told him to pursue it through his immediate employer. Can anyone enlighten me on transfer values, eligibility and any advice on what to do?!

saver861

Beckymarshall07 wrote: »

I'm keen to understand what options maybe through a local government pension scheme. The pension scheme is administered through LGPS who were very dismissive when I rang for information and told him to pursue it through his immediate employer. Can anyone enlighten me on transfer values, eligibility and any advice on what to do?!

I can't provide any info on transfer values but I'm sure someone on here will have some knowledge on it.

What I would say is that you should be able to find any information you request from your scheme administrators and employer. That's part of the service that is being paid for via contributions. Being dismissive to a customer request is not acceptable but you may need to get through to the relevant personnel to get the correct information or follow up on your enquiry.

colsten

Do you and your husband get any assistance from a hospice? They won't be able to sort out your finances for you but they should have people who can provide you with the right information and help you with practical guidance on the financials. You'd still need an IFA if you wanted to transfer the pension, if indeed this option exists.

kidmugsy

You poor souls; best wishes.

Pension schemes often have special provision for those near death: find out what his employer can tell you. If that's no use then .... well, we once had trouble when we were getting the brush off from an arm of the state. We reported the business to our MP and the swine then pulled their finger out. They don't like being shown up in public.

POPPYOSCAR

So sorry you find yourselves in this position.


It might be worth giving these people a ring, they may be able to advise you. They were very friendly and helpful when we rang them.
https://www.gov.uk/pensionwise

xylophone

http://www.lgps.org.uk/lge/core/page.do?pageId=102470

http://www.lgpsregs.org/images/EmployeesGuides/QandADBtoDCMembersv1.1.pdf

http://www.pensionsandannuities.co.uk/Terminal_Illness_and_Pensions.htm

Superscrooge

Is your husband in a trade union? Often they can be very helpful in giving advice to their members in situations such as this?

GunJack

talk to the employer first. Occupational schemes usually have death in service insurance and provide a survivors pension. Please check this out properly before even thinking of transfer values, whilst nice for the ifa, in all probability the worst option..

Not nice to have to deal with the financials at a time like this, it's unfortunately a necessity

edit:- just noticed its lgps, so definitely will have death benefit of between 2 and 4 times his salary, plus a survivor's pension. Get onto his employer sharpish....

hyubh

Beckymarshall07 wrote: »

I'm hoping someone might be able to help me. My husband is terminally ill.

Sorry to hear of your situation.

I spoke to a financial advisor last week about his financial affairs and he suggested looking into a transfer value.

In a nutshell, this would be giving up both the possibility of an ill health retirement and your own prospective benefits in the scheme to transfer out and (presumably) take larger amounts out as cash before then. That may well be what both of you would prefer, but please be conscious of what you would be giving up too (see below).

Having done a bit of digging online I understand basic principles of transfer value but I don't understand what this would cover (what he has paid into his pot to date and beyond)

From the LGPS fund's point of view it will be an ordinary transfer out to a money purchase arrangement (ordinary transfers out are based on a complicated set of factors however).

I'm keen to understand what options maybe through a local government pension scheme.

Essentially this splits two ways - either an ill health retirement, or stay an active member of the scheme and have survivor benefits due on death.

• Ill health retirements in the LGPS have three 'tiers'; a terminal illness would clearly get into tier 1, though there would have to be a formal assessment to confirm this. Assuming it is granted, he would receive an unreduced pension that extrapolates what he would have got had he remained in the scheme, at his current rate of pay, to his normal pension age (= his state pension age in the current CARE scheme). There will then be a widow's pension due on his death, and where applicable, child pensions too.
  
• Alternatively, if he is an active member of the scheme at the point he passes away, a death grant of three times his pre-sick leave salary, together with a survivor's pension of 1/160 his pensionable pay multiplied by the number of years he would have been in the scheme if he had remained in it until his normal pension age.

The pension scheme is administered through LGPS who were very dismissive when I rang for information and told him to pursue it through his immediate employer.

Sounds like at least one person manning the phones that day could learn a bit of tact! The element of truth in the response is that ill health retirements are employer decisions in the LGPS - the administering authority/scheme administrator's role is just to ensure the employer has followed correct procedure. As such, your husband does need to contact HR.

PensionTech

As people have said, you have a few options:
1. leave the pension where it is; when your husband passes you will receive a lump sum (looks like this would equate to 3x his annual salary, provided that he stays employed until he dies) plus a spouse's pension of half the amount he has built up to date
2. ask for an immediate pension on the grounds of ill health; he will receive payments until he passes away and then you will receive a spouse's pension of half the amount he has built up to date, and possibly a small lump sum as well
3. cash out the whole benefit as a "serious ill health lump sum" (only possible if the prognosis is less than 12 months); this will provide an immediate lump sum of 8x the pension he has built up
4. transfer to a personal pension; when he passes you will receive the whole fund as a lump sum.

It depends on how long your husband has to live, but if he doesn't need the money himself, the decision is really whether you need a pension for life or whether you want a lump sum. If you want a lump sum, option 4 is much better than option 3. However, you are presumably quite young yourself; a spouse's pension paid for the rest of your life could work out better in the long run, although you would have to consider tax issues (the lump sum would probably not be taxed, but the pension would be taxed as income, which could be very significant if you are working).

System

Hi

In my view, and this is not necessarily suited to you and your circumstances.

TERMINAL ill health should be dealt with by the employer and get an ill-health payment in force immediately.

Now to make up some figures...

In the first ten years of pension you get the most out of it, IE: MAXIMUM lump sum and 10 years of payments guaranteed.

So a pension £4000 per annum could get MAX lump sum of 25% (£1000) * 12 to give £12000 in cash.

Then 10 years of index linked payments £40,000 (so the balance in case of early death is paid as a death grant). Then a survivors pension commences. Easy calc is £52000.

Death in Service gets 3 * Salary as a Death grant and a survivors pension commences.

Unfortunately you have to look at the figures and decide which is better for the family long term, Death in Service or Death in Retirement.

You must speak to the employer and the LGPS and state the case quite bluntly.