Prudential keeping pension pot after death of my father

Marcon

fred246 said:

I know a man who is a very poor pensioner. Scraping by on state pension alone. His wife was an IFA. On retirement she took out a single life annuity and died a few months later. Apparently he was supposed to die first as he was a few months older than her.

Don't believe all you hear - any more than we believe all you write, especially relating to IFAs!

Notepad_Phil

SomeMadeUpName said:

Notepad_Phil said:

Sandtree said:

Notepad_Phil said:

dunstonh said:

"I have seen so many cases like this where the most important thing is maximising the income. Men have taken single life annuities so when they drop down dead the wife who thought she would continue to receive some or all of the income gets NOTHING. This is my bug bear when female spouse do not get involved in family finances."

That I do agree with.

However, having just done a  case like this in the last few weeks where we recommended 100% spouse as the objective was income for both lives, after supplying the figures, the husband has decided to go single life with a 10 year guarantee because the reduction to include spouse was too great.   So, now we are doing the case on insistent client basis (going against advice).

Does the wife know? It's one thing if she does and understands and is happy, however if she doesn't then it sounds almost criminal to do something like that. Mrs Notepad's mother was put into this situation and has had to live without her husband's pension for getting on for 20 years now. I've not digged into her situation but I know that the extra income would have come in handy.

There is no legal requirement for someone to ensure that their spouse is provided for on their death. It is their choice alone.

We're been together 13 years now, when we met I worked 40-50 hours a week mon-fri in financial services and earned very good money. She tended to work 50-65 hours on little more than NMW but Mon-Sun with a slant to weekend working. At that point we decided that for the loss of her income we'd rather have weekends/bank holidays etc together. Were I to fall under a bus tomorrow then she'd equally be left high and dry if I chose not to buy life insurance and again there is no legal requirement for me to do so.

Once of the few areas where Nanny State allows couples to make their own decisions rather than requiring people to buy insurance or take joint life pensions. 

Not sure what your point is. If your point is that the 'Nanny State' allows people to do that to their partner/spouse, then yes there is nothing to stop them from doing that. However I know that I would never knowingly take a unilateral decision that left my partner 'high and dry' and would hope that neither would most of the people on this forum.

Agreed, but the point being made I imagine is that there shouldn't be an obligation to provide for a spouse.

It isn't the state's job to look into peoples relationships and the finances therein.

Surely there are any number of circumstances where the choice of no spousal pension is best?

For example take a couple who both have worked, both have full SP coming and both have a half decent DC pot.  It could well be the judgement of both partners that they max an annuity income now and sacrifice spousal entitlement.  That way they get the max income to enjoy whilst together and whilst younger, safe in the knowledge that after first death the longer lived partner is still adequately provided for by there own provision.

But no one had said that the state should interfere, hence my confusion as to the point they were seemingly trying to make. And yes provided all partners are happy then anything they choose to do is fine, my post was with regard to someone who was possibly taking a unilateral decision that could have a long term negative impact on his wife.

jamesd

Perhaps interesting is that the state used to interfere. Back in the days of individual contracting out of the earnings-related part of the state pension the rebates would go into a pension pot with "protected rights". Those rights were the government's and compelled you to buy a dual life annuity. Even if single. The  protection was removed a decade or so ago and it's now just an ordinary pot.

dunstonh

Shame that the OP hasnt returned to follow up.  

Another point I would have followed up on is that I don't believe Pru did enhanced annuities via the whole of market.   They may have done and just been so bad that they never came out near top on terms but I don't recall seeing them.   So, I wonder if this was actually an in-house annuity (GARs perhaps) or even a standard lifetime annuity rather than enhanced.

Sandtree

Notepad_Phil said:

SomeMadeUpName said:

Notepad_Phil said:

Sandtree said:

Notepad_Phil said:

dunstonh said:

"I have seen so many cases like this where the most important thing is maximising the income. Men have taken single life annuities so when they drop down dead the wife who thought she would continue to receive some or all of the income gets NOTHING. This is my bug bear when female spouse do not get involved in family finances."

That I do agree with.

However, having just done a  case like this in the last few weeks where we recommended 100% spouse as the objective was income for both lives, after supplying the figures, the husband has decided to go single life with a 10 year guarantee because the reduction to include spouse was too great.   So, now we are doing the case on insistent client basis (going against advice).

Does the wife know? It's one thing if she does and understands and is happy, however if she doesn't then it sounds almost criminal to do something like that. Mrs Notepad's mother was put into this situation and has had to live without her husband's pension for getting on for 20 years now. I've not digged into her situation but I know that the extra income would have come in handy.

There is no legal requirement for someone to ensure that their spouse is provided for on their death. It is their choice alone.

We're been together 13 years now, when we met I worked 40-50 hours a week mon-fri in financial services and earned very good money. She tended to work 50-65 hours on little more than NMW but Mon-Sun with a slant to weekend working. At that point we decided that for the loss of her income we'd rather have weekends/bank holidays etc together. Were I to fall under a bus tomorrow then she'd equally be left high and dry if I chose not to buy life insurance and again there is no legal requirement for me to do so.

Once of the few areas where Nanny State allows couples to make their own decisions rather than requiring people to buy insurance or take joint life pensions. 

Not sure what your point is. If your point is that the 'Nanny State' allows people to do that to their partner/spouse, then yes there is nothing to stop them from doing that. However I know that I would never knowingly take a unilateral decision that left my partner 'high and dry' and would hope that neither would most of the people on this forum.

Agreed, but the point being made I imagine is that there shouldn't be an obligation to provide for a spouse.

It isn't the state's job to look into peoples relationships and the finances therein.

Surely there are any number of circumstances where the choice of no spousal pension is best?

For example take a couple who both have worked, both have full SP coming and both have a half decent DC pot.  It could well be the judgement of both partners that they max an annuity income now and sacrifice spousal entitlement.  That way they get the max income to enjoy whilst together and whilst younger, safe in the knowledge that after first death the longer lived partner is still adequately provided for by there own provision.

But no one had said that the state should interfere, hence my confusion as to the point they were seemingly trying to make. And yes provided all partners are happy then anything they choose to do is fine, my post was with regard to someone who was possibly taking a unilateral decision that could have a long term negative impact on his wife.

You said it sounded criminal that a person can choose to take a single life annuity without the knowledge of their spouse. If it sounds criminal the next step on is to make it a requirement that a spouse is consulted. Whilst you didn't state that you think it should I simply took it on its next logical step and expressed a view that I would disagree.

What certainly is true, having dealt with non-advised sales, a lot of people don't appear to fully understand what they've bought. Similarly most want to maximise what they can get now and are much less concerned about what happens if they live into their 90s etc. Indeed there was one infamous chap who'd taken his 25% lump sum on vesting and refused to give bank details etc to pay him the substantial monthly amount and has suggested its given to charity or used for the staff Xmas party etc.

Unless we want to also criminalise adultery etc then pensions should remain a personal choice. Most will make what they believe is the best decision for them as a couple but some of those will have been misguided and some will be selfish. The proportion of DB pensions with 50% or more 2nd life provisions is massively higher than annuities bought with DC pots so either people are selfish or couples  prioritise money now.

DairyQueen

Sandtree said:

The proportion of DB pensions with 50% or more 2nd life provisions is massively higher than annuities bought with DC pots so either people are selfish or couples  prioritise money now.

When my father reached 65 (almost 20 years ago) and was compelled to annuitise his DC pensions he made two (wrong) assumptions:

1) That my mother (severely disabled with MS) would be the survivor but would be 'looked after' by the state and...
2) That he would be lucky to live past 76.

As a result he opted for a single-life, level annuity.

He is now 84 and still fit and active and likely to outlive my mum. Not everyone prioritises 'money now'; sometimes they are simply ignorant of facts. Much more difficult to do own research back then (far less use of the web) and no compulsion to take advice.

Dad is lucky that inflation has been so low since he retired. Even so, he is the one who will suffer if he is the survivor (likely) as my mother now receives more in disability payments than he receives in annuity and SP.

Sandtree

DairyQueen said:

As a result he opted for a single-life, level annuity.

The other part of my message was also relevant to your fathers situation...  indexing, second lives etc all take big cuts out of what you receive today and if you believe your longevity is limited the idea of sacrificing a large slice of your income in case you live longer is a difficult decision.

My experience is that most insurers are broadly fair, remembering they have to cover the 1 in 200 event and expenses, but by definition that means the average punter looses out to cover the minority that live far longer

Marcon

dunstonh said:

Shame that the OP hasnt returned to follow up.  

Another point I would have followed up on is that I don't believe Pru did enhanced annuities via the whole of market.   They may have done and just been so bad that they never came out near top on terms but I don't recall seeing them.   So, I wonder if this was actually an in-house annuity (GARs perhaps) or even a standard lifetime annuity rather than enhanced.

Agree, but given the way this thread has been sidetracked, they may not even have spotted there were questions to answer. Perhaps starting a new thread to busily discuss new topics would help people like OP to follow responses relevant to them and see any queries people have raised to try and help answer why they posted in the first place.

SomeMadeUpName

Marcon said:

dunstonh said:

Shame that the OP hasnt returned to follow up.  

Another point I would have followed up on is that I don't believe Pru did enhanced annuities via the whole of market.   They may have done and just been so bad that they never came out near top on terms but I don't recall seeing them.   So, I wonder if this was actually an in-house annuity (GARs perhaps) or even a standard lifetime annuity rather than enhanced.

Agree, but given the way this thread has been sidetracked, they may not even have spotted there were questions to answer. Perhaps starting a new thread to busily discuss new topics would help people like OP to follow responses relevant to them and see any queries people have raised to try and help answer why they posted in the first place.

The first several posts after the op were direct questions, including one which quotes the op, so that would show as a forum notification wouldn't it?

Maybe to op is dealing with a lot after the death of their father and is too busy/stressed to return to the forum. That would be totally understandable.
or
Maybe what they heard wasn't a simple 'write here to complain and you will get compensated as you have been wronged' so they haven't followed up.

As a wild guess: Maybe what the father actually tried to convey to his family was that if he died during the guaranteed period the estate would receive the balance of the 10 years, and what he said was misheard? Given that it was taken in 2012 that would now be very little.

Or maybe as others have suggested he himself did not understand what he had done.

Who knows, without the lacking info certainly not anyone on here.

Marcon

SomeMadeUpName said:

Marcon said:

dunstonh said:

Shame that the OP hasnt returned to follow up.  

Another point I would have followed up on is that I don't believe Pru did enhanced annuities via the whole of market.   They may have done and just been so bad that they never came out near top on terms but I don't recall seeing them.   So, I wonder if this was actually an in-house annuity (GARs perhaps) or even a standard lifetime annuity rather than enhanced.

Agree, but given the way this thread has been sidetracked, they may not even have spotted there were questions to answer. Perhaps starting a new thread to busily discuss new topics would help people like OP to follow responses relevant to them and see any queries people have raised to try and help answer why they posted in the first place.

The first several posts after the op were direct questions, including one which quotes the op, so that would show as a forum notification wouldn't it?



Who knows, without the lacking info certainly not anyone on here.

OP is a newcomer to the forum, who may not spot (or even know) about notifications. Mine don't show up as 'flags' - or at least only sporadically.

It's easy for seasoned posters to forget that novices to the forum aren't familiar with how it operates and perhaps forget just how off-putting it can be to new users, who don't realise that their question can become a whole new discussion topic.

As you say, without the necessary information it's difficult to help.