What happens to DB pension on death

doris540

 I know my spouse will get half my pension however if I died say 12 months after I retire and he lasts another 6 months (prop not even 5hat because he can’t cook) what happens to the payments I realise there is no such thing as a pot of money in a DB scheme and this is one of the reasons people are jumping ship lining the pockets of IFA to a DC Scheme at the very least. I know if we last till we’re 100 we will have our money back as well and at least one of us is guaranteed a income of sorts Just seems if we both go skywards within 5 years of retiring all the money we’ve or rather I’ve put in has lined the pockets of the pension company

Albermarle

Once you both die , you are correct that will be the end of the pension .
Normally with a DB pension you are not dealing with a pension company as such . The pension is inextricably linked with your employer , whether public or private . The trustees of the scheme employ actuaries and investment mangers to help them run it .
They have the liabilities of the scheme to meet for many years into the future, and yes some members of the scheme will not get the full benefit of the scheme as they will die earlier than average, and some will get extra benefit if they live longer than average .
If they lived to 100 they would have been a very expensive pensioner for the scheme .
As far as the option of transferring out of the DB scheme, the pros and cons are debated endlessly on this forum . Have a look at this link .https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/five-good-reasons-good-with-your-money-guide-2018-edition.pdf

marlot

Just like an annuity, you pays your money and you takes your chances!
Make sure you live a long time so you get the most value for your investment!

doris540

I’ve also got £80k sat in the Pru which I took my 25 % TFLS a few years ago leaving the £80k which I imagine will go into drawdown plus my State pension and my current DC scheme which I’ve been in now some 15 years the figures on the statement of my DC scheme read that I will have to drawing it till I’m about 112 years old to get my money back or rather mine and the companies money back 

bostonerimus

People who die early enable people who live longer than expected to keep getting payments. The beauty of a DB pension is that it pools risk and should allow a larger initial withdrawal than from a DC scheme, this is called the mortality credit.

Silvertabby

Does your pension scheme have a guarantee period in addition to a spouses pension?  For example,  if you were to retire from the LGPS and then die within 10 years (5 years for pre 2008 deferred leavers), your spouse would receive a tax free lump sum (death grant) of 10 x your annual pension minus pension already drawn - as well as the immediate payment of the spouse's pension.  

Albermarle

figures on the statement of my DC scheme read that I will have to drawing it till I’m about 112 years old to get my money back or rather mine and the companies money back 

You can ignore these pension projections for DC schemes as they are overly pessimistic , so they can not be accused in future of misleading anyone . Normally in drawdown ,if the money is invested correctly , you can take out 3.5% each year ( increasing with inflation) and the likelihood is that even if you reach 90 , most of the pot will still be there, barring a catastrophic financial event in the meantime ( something far worse than the crash of 2018 ). Obviously you could take more than 3.5% out especially if you were not worried about having any left at some point.