Pension that makes mum WORSE OFF

LHW99

I used to do the phone calls sitting next to my mum, tell them loudly that I was her daughter and mum was there, handed the phone over and she would say something like "I can't hear a word you say, please talk to my daughter" - which seemed to solve the issue.

lisyloo

tacpot12 wrote: »

Sorry, I don't understand this bit. If there was a Life Insurance element to the pension, it would pay out a lump sum. Could it be that her husband had a Joint Life Annuity and it is that which is paying out to your Mother?

I’m guessing but is it possible that his pension went to the care home (minus £25 for person expenses) and this is now a spouses pensions?

jamesd

mike4leeds wrote: »

after dad passed we were notified that he had a Standard Life Personal Pension that was a Life Insurance bringing mum £53 extra per month.

It's likely that what he had was a "dual life annuity". After death of the first named person their spouse would then get 100%, 66% or 50% of the previous income level. The actual percentage depends on the contract but those are the common ones.

There's a very small chance that he hadn't bought an annuity and still had a personal pension pot. This would be a better situation for her because the pension pot would be capital to consider but certain amounts of capital are disregarded. So are some types of spending of capital, like updating old appliances. This might get her below the threshold. If she did want regular income she might get more buying an annuity now because of her age and health. If there is a pot it is not required to buy an annuity but firms often only mention what they offer, not the full range of options that transfers allow.

While the annuity already in place case is far more likely it's worth checking.

If it is from an annuity then dmelife is right to suggest asking about a "trivial commutation death benefit lump sum". She'd get this lump sum instead of the ongoing income. This would count as capital savings and affect benefits but since some capital is disregarded and some spending of capital is allowed it might leave her better off. Or the capital might be enough to buy her a higher paying annuity in her own name or do some combination of capital spending and annuity buying to stay within the limits. A firm doesn't have to offer this.

mike4leeds wrote: »

How is this fair?

There always will be cases where the overall system is fair but thresholds catch out individuals but for her it probably just means a benefits check and claiming benefits individually. Other than hassle and worry getting there she probably won't end up worse off. Still a pain, though.