Who is eligible to take a pension

bubbles1365

I am looking for some advice on what to do or who to go to for advice about a pension.  My father worked for a large multinational company for many years and paid into a pension.  He was divorced and did not keep his beneficiaries up to date.  When he died he had an ex-wife and grown up children.  Advised by company that we are not eligible for any of his pension or contributions at all - is that correct?  Can anyone point me in the direction for proper advice on what to do next, surely the company cannot just take his contributions and swallow them up like this?
Thanks.

eskbanker

You'd need to ascertain the rules of the scheme concerned but it is entirely possible that any pension rights died with him.

SFindlay

bubbles1365 said:

I am looking for some advice on what to do or who to go to for advice about a pension.  My father worked for a large multinational company for many years and paid into a pension.  He was divorced and did not keep his beneficiaries up to date.  When he died he had an ex-wife and grown up children.  Advised by company that we are not eligible for any of his pension or contributions at all - is that correct?  Can anyone point me in the direction for proper advice on what to do next, surely the company cannot just take his contributions and swallow them up like this?
Thanks.

You'll need to check but sounds like already done that and told the answer!!
Not sure why you would think there would be an entitlement though as if divorced the ex will not be entitled to anything (why should they be!! Sorry thinking of me ex!!) and most pensions will only provide for children still in full time education so sounds like that doesnt apply either. 
The company are not just swallowing it up you have to remember in this day and age when life expectancy is a lot longer than when he took his pension out for every one person who doesnt get a lot of income from the pension there are numerous who get more years than was expected!! 

Linton

bubbles1365 said:

I am looking for some advice on what to do or who to go to for advice about a pension.  My father worked for a large multinational company for many years and paid into a pension.  He was divorced and did not keep his beneficiaries up to date.  When he died he had an ex-wife and grown up children.  Advised by company that we are not eligible for any of his pension or contributions at all - is that correct?  Can anyone point me in the direction for proper advice on what to do next, surely the company cannot just take his contributions and swallow them up like this?
Thanks.

Did he die before or after starting to take his pension? If the former was he working for the company at the time?
Generally companies dont "take contributions and swallow them up".  Pensions work on an insurance basis - those who "dont claim" by dying early pay for those who die late. It avoids those who live too long running out of money.

steampowered

The company won't have taken his contributions. His contributions would have gone to the pension scheme, and would have been paid out to members of the pension scheme.

bubbles1365

So when you pay into a company pension scheme, if you die in service, without dependents or noted beneficiaries, your pension pot on death, goes to fund others pensions and not to your estate?

eskbanker

bubbles1365 said:

So when you pay into a company pension scheme, if you die in service, without dependents or noted beneficiaries, your pension pot on death, goes to fund others pensions and not to your estate?

It depends on what sort of scheme it is and its rules - defined benefit schemes don't involve building up a pension pot as such, whereas defined contribution schemes do.

Linton

bubbles1365 said:

So when you pay into a company pension scheme, if you die in service, without dependents or noted beneficiaries, your pension pot on death, goes to fund others pensions and not to your estate?

As said, if it is a DB scheme the money goes into a general fund, there is no individual allocation whereas with a DC pension there is an individual allocation and that is available for the people nominated by the deceased.  However many pension schemes include a death in service insurance benefit separate from the pension.

Aretnap

bubbles1365 said:

So when you pay into a company pension scheme, if you die in service, without dependents or noted beneficiaries, your pension pot on death, goes to fund others pensions and not to your estate?

If it was a defined benefit scheme then as the others have said it's wrong to think in terms of a "pension pot". He never had a defined amount of money that was "his". What he had instead was a promise that the company (or its pension scheme) would keep paying him a regular income for the rest of his life - regardless of whether he died the day after he retired, or whether he lived to be a hundred.

For most people this is an extremely valuable benefit as it gives them certainty and means that they never have to worry about running out of money in retirement. Though I appreciate that it might not feel like this if your dad was one of the unlucky people who die fairly soon after they start to draw their pensions.

Some schemes will also pay an income in some circumstances after the member has died so it is worth checking the exact terms of the scheme. They vary from scheme to scheme, but, for example, it is fairly common for the pension to come with a guarantee that it will pay out for a minimum of 5 years - so if you die a year after you retire it will continue to pay to your heirs for a further 4 years. Or  it might pay some money for longer to some specific classes of people; for example paying a percentage of the original sum to a surviving spouse for as long as he/she lives, or to children until they complete full time education. However this is a provision intended to cover financial dependants; it will not tend to stretch as far as paying money to divorced spouses or grown up children.