Death in Service - how to be sure partner will receive it, rather than company in financial trouble?

Sandtree

I've experienced the issue of a DIS payout with unclear wishes (last form submitted was for his wife at the time of submission but now long term ex-wife but mother to his eldest child, but he had lived with his partner for 6 years and had a child with her too) with a company that both was in financially challenging situation and very relaxed about regulation. 

It took a while for the trustees to decide where the monies should go (they eventually gave all £500k to his partner) but at no point was there a question of them going to the company.

sheramber

 When my husband died, despite being married and inheriting everything from his will, the Trustees of his private pension said they  had to investigate who the payout should go to.
My sons insisted to them that it should go to me but  I had to complete a form  including details of  my sons' details and  if there were any dependents  
 It took a few weeks but the Trustees did pay out to me.
Make sure you have a will and maybe consider getting married  or a civl partnership if it makes you feel safer.  After all, it only needs a short trip to the registrar and nobody else needs to know about it.

mulan173

Thrugelmir said:

mulan173 said:

Btw we don't have a joint bank account or joint ownership of property or things like that,  It would be easy for trustees to say there is no real evidence of a relationship.

If your partner is unable to satisfy the Trustees that you were cohabiting for at least 2 years (likewise freely able to enter into a legal relationship) and that you were financially interdependent. Then no monies would be paid out. Onus is entirely on your partner to provide the evidence requested. 

Unless you are willing to be proactive then it will be easy for the Trustees. Only yourselves to blame. 

We aren't financially interdependent. I owned my house (with a mortgage) before partner moving in, partner now pays half of the overall monthly costs of bills etc, but not towards the mortgage, similarly partner owns her own flat elsewhere which is now rented out, which I don't contribute to the mortgage payments for. I have put the bills into joint names where I could (council tax etc) but for some of them, like the electricity and gas, the account now has to be in the name of a single account holder only, and it was already in my name.

We've always made it a point of each being financially independent and able to survive as an individual without relying on the other person, and then just contributing in proportion to the joint bills etc.

I don't really even know what it means to be financially "interdependent". We each work, earn our own salary, that goes into our own bank account. If one of us were to be laid off would the other person support them -- yes of course, but still with the expectation of finding another job and being able to contribute again, rather than just being a "kept person" because of being financially dependent.

We have proof of cohabiting for many more than 2 years, as in bank statements sent to the address and things like that... but of course I could set my address to anything I like (that I have access to, like a friend's address) and it doesn't prove in itself that we lived together. What concrete proof is there?

If my partner couldn't 'prove' (because it isn't true!) that we are financially interdependent... what would happen to that money from the Death in Service scheme then?

Also does that mean that Death in Service could only be left to someone with whom you are "interdependent" and not to a friend or parent (if you didn't have any dependents) etc?

I'm a bit concerned about the possibility of money disappearing into a black hole (aka the company's pockets) based on a technicality, then.

As I understand it the death in service money doesn't actually exist as a ring-fenced "pot" in a bank account somewhere of 3x everyone's salary... so if it actually happened, it would have to be paid out from another "pot", probably the company's main bank account... it would be tempting then to show that "technically" (in some way) the employee didn't have ties to the beneficiary so oh, well, that money isn't payable (= goes in to the company's coffers).

mulan173

xylophone said:

The assets of the pension scheme are entirely separate from those of the company.

The Trustees cannot simply choose to direct the pension wherever they please - they are bound by the rules of the scheme.

If this were not the case, what would there be to prevent Trustees from simply deciding that they would pay all DIS payments to themselves or their favourite great aunts?

This is separate from the pension scheme, even if I've opted out of the pension scheme I still have access to the "death in service".

Of course they can't just direct it to a favoured Aunt or whatever, but as I understand it the money has to be paid out in accordance to who would most benefit from it even if that's against the expression of wish, and it may well be that the survival of the company as a whole is a "better" beneficiary than a nominated unmarried partner who is already financially independent, if you just look at number of people impacted. The death in service payment could pay 3 other employee's salaries for another year.

davidmcn

mulan173 said:

xylophone said:

The assets of the pension scheme are entirely separate from those of the company.

The Trustees cannot simply choose to direct the pension wherever they please - they are bound by the rules of the scheme.

If this were not the case, what would there be to prevent Trustees from simply deciding that they would pay all DIS payments to themselves or their favourite great aunts?

it may well be that the survival of the company as a whole is a "better" beneficiary than a nominated unmarried partner who is already financially independent, if you just look at number of people impacted. The death in service payment could pay 3 other employee's salaries for another year.

I've never heard of such a thing happening. Have you?

Old_Lifer

The death- in- service lump sum is actually a Group Life Assurance  Policy and forms  a separate  part of the pension scheme.  It is term assurance costed on a single premium basis.    It is in effect,  a one year term assurance where the premium is  re-calculated on the Scheme anniversary each year and is based on the number of members, ages  and salaries.  The premium for the life cover is usually paid annually.     Some employers require employees to be covered  as soon as they enter service and before they have joined the main part of the pension scheme.      On a claim arising,  the policy pays-out quite  quickly after the death certificate is received.     During my service we usually settled a claim within a week or ten days.

As has been explained already,   the Trustees are accountable and must act  within  their powers as laid-out in the Trust Deed. These  powers are  usually widely-drawn and  will  probably allow them to pay the proceeds to a parent.

Your understanding is probably based on what you have read in the scheme booklet issued to members,  whereas the actual Trust Deed will be much more comprehensive.