Will my wife get any of my pension?

souza

Hi,
I'm a 40 yr old man. I have a salary of £50k while my wife has a salary of £12k. I pay in around £500/month into my pension while my wife pays £150/month. In my retirement, obviously I will be getting more pension and me and my wife can make ends meet well. However, If I were to go early (to the heavens), will my wife benefit from all the extra pension which I've paid in my lifetime? or will she end up with a paltry pension based only on the £150 she pays? I'm asking because if she won't benefit from any of my contributions, then I'd rather decrease my pension contribution and increase her contribution.
Kindly advise, as I have no idea what is the right thing to do.
Thanks.

Dazed_and_C0nfused

Is yours a DB or DC pension?

souza

Mine is a DC pension. the money goes from my monthly salary.

ukdw

Assuming both of your pensions are DC pensions then you can both nominate who you would like to get any remaining  pension when you die as long as an annuity is not purchased.  

Should at some point one or other of you buy an annuity then are options for some or all of the pension income to pass to the survivor - at the cost of a slightly reduced income.

On the subject of unequal pensions. Then are tax advantages in spouses having more equal pensions than yours appear to be heading towards - such as the ability for both parties to have enough to make full use of the tax free allowance in retirement - which could well be quite a lot more than the current £12.5k once one or both of you reach the age when you can start drawing down - likely to be late 50s for you.   

Another factor to take into account of relative ages - I.e. if for example you are a lot older than your wife then you would want to think carefully before tying up too much potential pension income in your wife's name - as you wouldn't be a able to access this until your wife reaches the minimum pension drawdown age.

Also should your salary rise into higher rate tax territory then you would probably need to consider skewing the pension back towards you in order to maximise tax relief.

Sandtree

souza said:

Mine is a DC pension. the money goes from my monthly salary.

Then when you retire you then decide what to do with the pot, within limits, and that decision will dictate what happens upon your demise. Even if you were to go down the annuity route, which would be surprising these days, you can have a spouses benefit upon your death (though this reduces what you get during your life).

Albermarle

Although probably it is not part of your plan. Even if you do not take any money from your pension and just leave it invested , the pot will still pass on to your beneficiaries even if you live to a ripe old age .
Be also aware that these pension pots should  not be included in your will . The trustees of the pension will allocate the money to your nominated beneficiaries so make sure the ' expression of wish ' form is filled in. 

Marcon

Albermarle said:

Although probably it is not part of your plan. Even if you do not take any money from your pension and just leave it invested , the pot will still pass on to your beneficiaries even if you live to a ripe old age .
Be also aware that these pension pots should  not be included in your will . The trustees of the pension will allocate the money to your nominated beneficiaries so make sure the ' expression of wish ' form is filled in. 

They certainly can be. If you complete an Expression of Wish (aka Nomination) Form asking the trustees/managers to pay to your estate, they can decide to do so. The pension money remains tax free provided you cannot make a binding instruction to pay the money to your personal representatives. Can be very useful to pay IHT. Just make sure your will covers the situation where the money is paid to your estate - and also what happens if for some reason it isn't.

[Deleted User]

I don't really like the term Pension in a DC scenario.
It is a tax efficient savings scheme, your wife won't get a monthly pension, she will get a pot of investments in which she has to decide how much she takes out of it. There is NO guaranteed income!
She will need to sell some of the investments in the pot into cash and then take this in monthly instalments and repeat each year
If she sells some of the pot too quickly it may be gone in 5-10 years, if the stock market goes down and the investments are poor it could be even less
There are alternatives such as annuities, but these have a very poor rate at the moment

Albermarle

Marcon said:

Albermarle said:

Although probably it is not part of your plan. Even if you do not take any money from your pension and just leave it invested , the pot will still pass on to your beneficiaries even if you live to a ripe old age .
Be also aware that these pension pots should  not be included in your will . The trustees of the pension will allocate the money to your nominated beneficiaries so make sure the ' expression of wish ' form is filled in. 

They certainly can be. If you complete an Expression of Wish (aka Nomination) Form asking the trustees/managers to pay to your estate, they can decide to do so. The pension money remains tax free provided you cannot make a binding instruction to pay the money to your personal representatives. Can be very useful to pay IHT. Just make sure your will covers the situation where the money is paid to your estate - and also what happens if for some reason it isn't.

OK I was not aware that a pension can be paid into an estate. Most of the discussion on here on this subject is around the fact that you can keep pensions outside the estate , so they are not liable for IHT. 
Apparently a lot of people mention an individual in their expression of wish form, but then also put in their will ( DIY one presumably ) that they leave their pension to the same person, which confuses things.

Silvertabby

Albermarle said:

Marcon said:

Albermarle said:

Although probably it is not part of your plan. Even if you do not take any money from your pension and just leave it invested , the pot will still pass on to your beneficiaries even if you live to a ripe old age .
Be also aware that these pension pots should  not be included in your will . The trustees of the pension will allocate the money to your nominated beneficiaries so make sure the ' expression of wish ' form is filled in. 

They certainly can be. If you complete an Expression of Wish (aka Nomination) Form asking the trustees/managers to pay to your estate, they can decide to do so. The pension money remains tax free provided you cannot make a binding instruction to pay the money to your personal representatives. Can be very useful to pay IHT. Just make sure your will covers the situation where the money is paid to your estate - and also what happens if for some reason it isn't.

OK I was not aware that a pension can be paid into an estate. Most of the discussion on here on this subject is around the fact that you can keep pensions outside the estate , so they are not liable for IHT. 
Apparently a lot of people mention an individual in their expression of wish form, but then also put in their will ( DIY one presumably ) that they leave their pension to the same person, which confuses things.

As far as the LGPS is concerned, paying the death grant to the Estate is a final resort move.

I've only known it done twice in 20 years.  One was in respect of a fairly substantial sum (£30K +), no spouse, no children, no siblings, no expression of wish form and no Will.  Just several cousins(?) X times removed who were all clamouring for a cut. 

TBC15

In the event of my death I would like to pass my SIPP on to my wife. In the event of us both dying together I would like it to pass on to my brother. (All tax free)

My wife is mentioned in the expression of wish with the SIPP supplier and my brother is executor of my estate should my wife die at the same time as myself. Is this sufficient preparation to allow my SIPP to pass on tax free to my brother?

Edit Apologies for the hijack