Another Alpha question - death!

tintin00

Hi Folks,
I made another post a week or so ago regarding starting an Alpha pension and the options for substituting it with either continued SIPP contributions, or Added Alpha. I received some great feedback and am starting to think that Added Alpha might be the way to go as one poster rightly pointed out 'why take the risk with the stock market if you dont have to'.

However when looking at Alpha, the death benefits seem rather mediocre being 3/8. I dont like the idea of building up a large DB pension by transferring in my SIPP, piling into Added Alpha, then taking early retirement with a DB pension of say £35K and then a few years later being unlucky enough to die and the wife left with £13K!

How to others view this. Am I missing something. Is life insurance an option to offset the risk of checking out early?

Andy_L

Alpha gives a lump sum payment of 5 years pension if you die with a pension in payment as well as the 3/8ths pension

hugheskevi

However when looking at Alpha, the death benefits seem rather mediocre being 3/8.

Death benefits can be enhanced through allocation.

This reduces the main scheme pension when drawn in return for higher death benefits should the member pre-decease their partner. The cost is based on the age of the member and partner.

I dont like the idea of building up a large DB pension by transferring in my SIPP, piling into Added Alpha, then taking early retirement with a DB pension of say £35K and then a few years later being unlucky enough to die and the wife left with £13K!

There is a 5 year guarantee (ie you will receive at least 5 years of pension (including pension already paid) even if you die shortly after drawing the pension).

How to others view this. Am I missing something. Is life insurance an option to offset the risk of checking out early?

It is less of an issue if retirement income is reasonably equal across partners.

Take into account all sources of retirement income, including State, and work out how to make financial resouces, including both capital and income, broadly neutral regardless of which partner dies first.

That could involve having some DC pension as insurance (to be inherited if you die, and drawn if you don't), deferring partner's State Pension could also be a way to re-balance income. Life assurance could play a role, as could cash/ISA savings.

Tom99

Am I right in thinking that if you pay into Added Pension but die before you retire you would lose the Added Pension payments since your death in service payment would remain the same?