Advice on Royal London GAR after death

keyring88

Hi all,

My father passed away recently. Prior to this, he opted to take Royal London's GAR giving him a monthly income for the remainder of his life. I have read that after his death, my mother will receive 50% of the payments per month that he received for the remainder of her life.
I believe he took 25% of his 'pension pot' as that is tax free.
My question is, what happens to the remainder of this money now he has passed away? Is this withdrawable?
My mother was married and listed as his beneficiary both in will and all paper work for RL.

Thanks in advance.

Silvertabby

My sympathies.

By buying an annuity, your father exchanged his pensions savings for a guaranteed monthly pension for the rest of his life plus, from what you say, a further guaranteed pension for your mother for the rest of her life.

I regret that there is no pot of money to draw from. I know this won't be any consolation to you or your mother, but any unused funds from your father's pension savings now belong to the annuity company and will be used to offset their losses incurred by paying the ongoing pensions of pensioners who live to 100. It's the way annuity companies have always worked.

xylophone

Your father's pension pot had a certain monetary value.

He took 25% of that as a tax free pension commencement lump sum.

He chose to use the rest of the money in the pot to buy an annuity with 50% spouse pension.

Your mother will receive that pension for the rest of her life.

dunstonh

Sorry for your loss

I have read that after his death, my mother will receive 50% of the payments per month that he received for the remainder of her life.

Was that on the internet or on specific policy terms for his particular pension?

When he bought the annuity, he had a range of choices. Single Life, Joint life 50% or 100% or other for example. So, it would depend on what he chose to have.

My question is, what happens to the remainder of this money now he has passed away? Is this withdrawable?

There is no money. He gave up the pot of money in exchange for a guaranteed income for life (and possibly his wife's life).

It is all down to the terms he chose to have in the event of his death. RL should be able to answer that without any difficulty.

keyring88

Just read through, indeed he did take some money tax free as a lump sum. Then purchased the annuity for the remaining monies in the 'pot'.
So she'll receive this monthly amount for the rest of her life.

Silvertabby

keyring88 wrote: »

Just read through, indeed he did take some money tax free as a lump sum. Then purchased the annuity for the remaining monies in the 'pot'.
So she'll receive this monthly amount for the rest of her life.

Have you actually checked that with RL? As Dunston says, that depends on your father's choices when he started to draw this annuity. ie, among other choices, he would have been given the option of a larger single life pension which would die with him or a smaller pension with widow's benefits.

Sadly, so many people have misunderstand the questions and have made the 'wrong' choice.

xylophone

just read through

I see what the posters above mean.

I had assumed when you said that you had "read", you were referring to the actual terms of the annuity your father bought.

When you read through the paperwork, it did actually indicate the 50% spouse pension?

keyring88

Sorry, been a bit hectic. Yes I have just read through the paperwork. I had wrongly assumed that the 25% he took WAS the annuity. However, he took 25% as a lump sum tax-free, then purchased the annuity with the remainder, which included the 50% spouse.
Is there no way of getting this reversed or refunded? He died within 4 months of purchasing this annuity - and it's a lot of money to just go to the annuity company.
I've worked out that to break even, just for himself (not the 50% included) he'd have had to have lived until he was 83 (he was 54 when he died of Leukaemia related pneumonia)...

woolly_wombat

I am very sorry for your loss, and also relieved to hear that your late father made provision for your mother with the purchase of a 50% spouse's pension.

The only consolation I can offer you is that a GAR was involved and presumably, therefore, the annuity rate would have been greater than what was available on the open market.

dunstonh

Is there no way of getting this reversed or refunded? He died within 4 months of purchasing this annuity - and it's a lot of money to just go to the annuity company.

That is the way it goes. Those that die early subsidise those that live a long life.

There is also normally a guarantee period where the full amount is paid for x years (on older plans usually 5-10 years. Modern options allow much longer, 20-30 years). If it was 100% spouse, you would not expect a guarantee period. But 50% spouse could well have one.

And no, it is cast in stone at point of purchase.

I've worked out that to break even, just for himself (not the 50% included) he'd have had to have lived until he was 83 (he was 54 when he died of Leukaemia related pneumonia)...

The minimum age for commencing a pension is age 55. You say he was 54. So, he shouldnt have been able to do this unless he had a protected scheme age (which exists but is extremely rare). So, a potential anomaly here.

Annuities are best taken out in your 60s (or even 70s). Not in your 50s. At 54, the average person is going to live into their late 80s with half getting well into their 90s.

If he wasn't well when he bought the annuity, was his adviser aware of this? Or did he not use an adviser and just told RL what to do?

keyring88

I think he was able to take out the pension early, due to his cancer diagnosis in September. Indeed he took another lump sum from another pension he had, again tax-free.
I don't believe he used an advisor and just advised RL.