Surviving spouse pension question

nkb21

In terms of the surviving spouses pension element of my DB pension, my relevant scheme guide states that the surviving spouse would entitled to:

a pension equal to half the pension you were receiving when you died (including any increases you received since the date you retired but ignoring any reduction because you exchanged some of your pension for a lump sum) and ignoring any State deduction applied to your pension.

As I took a TFLS, my adjusted pension when I retired was c.£25k. Had I not taken the TFLS, it would have been roughly £30k. So in respect of the above, if I were to die (not that Im planning to) in say 10 years, having received say 3% annual increases to my pension, would the 50% be applied to:

1. £32619 (£25k x 10 years at 3% incr p.a) or
2. £39143 (£30k x 10 years at 3% incr p.a)

I’m assuming (2) but my annual pension increase letters only reference my current (£25k) pension so before I contact the scheme administrators (a painful experience), I wonder if any of the guru’s on here know for sure how it would be applied.

GunJack

It appears to be common that a spouse's pension will be based on your non-reduced pension, so your point 2 should apply, giving your survivor around £19.6k.

Brynsam

It's your own pension you exchanged for tax free cash, and the rules of your scheme say, in that gloriously convoluted way of pensions, that any survivor pensions (spouse and/or eligible children) would be based on the full pension, as if you'd taken no tax free cash.

Audaxer

nkb21 wrote: »

a pension equal to half the pension you were receiving when you died (including any increases you received since the date you retired but ignoring any reduction because you exchanged some of your pension for a lump sum) and ignoring any State deduction applied to your pension.

It would be 50% of the £30k, plus inflation increases over 10 years. I take it that means the same percentage increases that you received each year rather then the same amount of increase you received, i.e. you would have received the CPI percentage added to £25k, but your spouse will receive the CPI percentages over the 10 years added to £15k. So a lower amount of increase than you received each year, but added cumulatively over the 10 years to £15k rather than £12.5k. That is how I understand it.

nkb21

Thank everyone, that's how I interpret it too. Hope I don't need to find out for sure for quite a while yet!

xylophone

Thank everyone, that's how I interpret it too. Hope I don't need to find out for sure for quite a while yet!

For the avoidance of doubt, why not contact the administrator and ask for confirmation in writing?