Lost Pension

alder30

Hi, I wondered if anyone had some advice or information.
Some years ago my step father passed away, he had a substantial pension pot, He nominated my mother as his beneficiary in the event of his death.
The issue is my mother passed away before him, the pension company say that because he never changed the beneficiary details after her death, she was still named as beneficiary when he died some years later, they don't need to pay out anything.
So where has that money gone and are they allowed to to do that, surely it should go to his family or his estate when he died?

MallyGirl

Was it really a 'pot' or was if a defined benefit pension?

Dazed_and_confused

And you say he passed away "some years ago".

What is "some years ago" and what has resurrected this issue now?

dunstonh

The issue is my mother passed away before him, the pension company say that because he never changed the beneficiary details after her death, she was still named as beneficiary when he died some years later, they don't need to pay out anything.

I think there may be some terminology issues here.

Defined contribution schemes pay out regardless of name beneficiary no longer being valid. They would look to the next person suitable.

A defined benefit would only pay out to a spouse or dependent children r very limited other scenarios.

If it was a pension in payment, such as an annuity, then there is no pot to pay out. If it was set up as joint life, then it pays out whilst both are alive but would stop when both are dead.

So where has that money gone and are they allowed to to do that, surely it should go to his family or his estate when he died?

Impossible to answer without knowing what type of pension it was and what phase it was in (i.e. in the accumulation stage during working life or the payment stage in retirement).

Dox

Could you give the name of the pension company, please? Might help us to answer your question accurately.

alder30

I Don't have much information at this moment, the executor of the will dealt with it at the time, this was around 8 years ago, the reason why I am bringing it up now is I'm busy dealing with my own pension and nominated a beneficiary in the event I die before, it just had be thinking about my step fathers pension and how it kept all his money he paid in, I felt that was unfair.
I haven't got any details of his pension, the solicitor or executor of his will may still have details but I don't want to ask for the info if there is no point.
He died before it paid out, he was only 54.
The only information we (his step children) got when his estate was being sorted out that his pension which he paid into through his employer was lost due to his named beneficiary being deceased.
I just think in that event surely any benefits should be paid to his estate? I guess not, so its just swallowed up into the scheme and the company get the money?
I thought there may have been a straight forward process but from the replies it sounds much more complicated that that.
I don't want the same thing to happen to my pension so I have made sure I've nominated a beneficiary and made sure they are still alive!
Thanks

Dox

alder30 wrote: »

I haven't got any details of his pension, the solicitor or executor of his will may still have details but I don't want to ask for the info if there is no point.

The snag is that if you don't ask for the information, it's impossible to know if there is 'no point'.

My guess (based purely on what you've told us the pension company said) is that it was a final salary scheme and your stepfather died leaving neither a spouse nor an 'eligible child' (normally a 'child' for this purpose is a natural or step child who is under 18, or under 23 and in full-time eduction/training, or under some sort of disability).

If the rules of the scheme in question allowed him to nominate another beneficiary, it is likely that would have needed to be someone who was living with him 'in a relationship akin to marriage' or some such wording - he couldn't nominate adult stepchildren.

Failing all the above (which seems to be the case), and assuming it was a non-contributory pension scheme, it is entirely possible that no benefit would be payable. Under the rules of such schemes, someone who dies before reaching retirement age, leaving no survivors who would qualify for a pension, does not leave any sort of 'benefit' which could be paid to the estate.

dunstonh

The only information we (his step children) got when his estate was being sorted out that his pension which he paid into through his employer was lost due to his named beneficiary being deceased.

That description doesnt fit any type of pension. Maybe it is your recollection that is slightly off here. For example, on defined benefit scheme, if the spouse dies before the pension holder and there are no dependent children under 23 then the pension dies with them. There is no pot of money and no-one to name as a beneficiary.

I just think in that event surely any benefits should be paid to his estate?

Pensions are outside of the estate. A money purchase pension like yours has a value and will be passed on. A defined benefit scheme though does not.

Dox

dunstonh wrote: »

For example, on defined benefit scheme, if the spouse dies before the pension holder and there are no dependent children under 23 then the pension dies with them. There is no pot of money and no-one to name as a beneficiary.

Not always. A widow/er is often entitled to name a beneficiary where (as mentioned above) they are living in a relationship akin to marriage, financially interdependent with a new partner or similar. It is almost invariably at the discretion of the trustees whether to award a survivor's pension, but it certainly happens.

dunstonh

Dox wrote: »

Not always. A widow/er is often entitled to name a beneficiary where (as mentioned above) they are living in a relationship akin to marriage, financially interdependent with a new partner or similar. It is almost invariably at the discretion of the trustees whether to award a survivor's pension, but it certainly happens.

I did mention other scenarios in the earlier post. However, the OP has not mentioned any new spouse/partner.

Silvertabby

Dox wrote: »

Not always. A widow/er is often entitled to name a beneficiary where (as mentioned above) they are living in a relationship akin to marriage, financially interdependent with a new partner or similar. It is almost invariably at the discretion of the trustees whether to award a survivor's pension, but it certainly happens.

Payment of survivor's pensions to unmarried partners is a relatively (in pensionspeak terms) new thing. In the case of the LGPS, for example, this option is only available to those who were contributing members of the scheme on or after April 2008. Those who left before then only have the legally married spouse option - and 'trustees discretion' cannot be used to overturn this rule.

ADD: Without full details of OP's stepfather's pension scheme, we're all a bit in the dark. That said, it is almost certainly correct that the scheme didn't pay out a survivor's pension as there were no eligible dependants as at the date of death.

However, and this is the biggie, I would have expected there to be a one-off lump sum death grant. This could be as little as a refund of pension contributions, or as much as 3 or 5 times the annual pension due had OP's stepfather lived to draw his pension. Even more if stepfather was still working/paying into a pension scheme which included death in service benefits.

So, the question is, did a (blood) family member - I'm thinking stepfather's own child/children or sibling - claim the lump sum and not tell the stepchildren?