Private pension

Julie_Ginn

Can anyone advise me on how to recover my late mothers private pension lump sum award. She decided to take her small private pension as a lump sum and was awarded it by letter and was advised that it would be transferred into her bank account a month after receiving the award. Before this could happen my mother passed away suddenly. Contact was made with the pension company to advise them of the situation who then asked for additional information ie a copy of her will and documents supporting the trustees/beneficiaries of her will which was sent to them. I have emailed them due to not hearing from them and was advised in one email that there would be no payout and the case was closed. I have followed this up with a subsequent email and to date have still not heard from them. Is it the case that a private pension dies with the person or due to the lump sum awarded before death that this should still be paid out?

dunstonh

What type of pension was it?

Was the pension already in payment as a regular income?

Is it the case that a private pension dies with the person or due to the lump sum awarded before death that this should still be paid out?

The term "private" pension is not a pension type. Although it is sometimes used by people to classify a pension that has not had anything to do with an employer. However, that still covers a very wide range of pension types.

As it is not an employer scheme (so that rules out Defined benefit pensions) then you would expect the fund value to be paid out on death if the pension is not in payment of a regular income. There are some versions where death benefits would be different though (but less common).

If this was a pension already in payment with an annuity or scheme pension then these can be commuted to a lump sum if the scheme is prepared to do so. Not common but it can happen with smaller pensions. However, you have to be alive for this to happen and the scenario you describe would fit. However, there are several other ways that scenario could apply depending on type of pension. Hence, we need a bit more detail

Brynsam

dunstonh wrote: »

The term "private" pension is not a pension type. Although it is sometimes used by people to classify a pension that has not had anything to do with an employer. However, that still covers a very wide range of pension types.

As it is not an employer scheme (so that rules out Defined benefit pensions) then you would expect the fund value to be paid out on death if the pension is not in payment of a regular income.

Many people use the term 'private pension' purely to distinguish it from a state pension, so I'm not sure your conclusions will hold good if that is the context in which OP uses it. The government certainly uses the term this way: https://www.gov.uk/plan-retirement-income/your-pension-options

OP - rather than struggling to explain yourself here, why not give TPAS a call for free, impartial assistance: https://www.pensionsadvisoryservice.org.uk/ask-us

dunstonh

That is the problem with the term "private pension". It has no actual meaning and is different things to different people.

xylophone

Was this a trivial commutation of a pension already in payment?

https://www.litrg.org.uk/tax-guides/pensioners-and-tax/how-do-i-cash-my-small-pension-trivial-commutation

Julie_Ginn

Thank you for your reply,

The pension was received as a small monthly income which she received every month. She applied to have this commuted to a lump sum that was awarded by the pension people prior to her sudden death.

dunstonh

On that basis, then it sounds correct. (noting caveat that we dont know the type of pension).

The income is payable for life. If you die and no death benefits or guarantees were purchased then the pension ends.

The commutation was a risk-based assessment by the pension provider to get a small monthly pension off their books in exchange for a small lump sum. Unfortunately, the death would end that from happening.

Alibert

Did they make the last due monthly payment ? If that was not made I think you'd be able to argue that the commutation happened before she died.

Brynsam

What's the scheme - or who is this the insurer, depending on the type of scheme?