Survivor's Pension

AP3

Hi,

I'm in the unfortunate position of having to look at pension benefits after a spouse dies.

My wife has stage 4 cancer. She has a final salary pension with her employer, and her statements show a lump sum payable on death, and also a survivor's pension.

I'm confused about the survivor's pension. My wife is only 44 and I am 42. Is the survivor's pension still payable if they pay out the lump sum, and when does it become payable? Is it when I reach retirement age?

Thanks,
Andy

Silvertabby

My sympathies to you both.

It really depends on the scheme rules, but normally the death grant and the survivor's pension are paid immediately, regardless of the age of the recipient.

Are you able to post the name of the pension scheme?  And if your wife is currently working, or if her pension benefits are deferred.  Those of us with experience of specific schemes may then be able to help further  

AP3

Thanks for your reply and your sympathies Silverytabby.

The statement just has her Employer's name, and "Future Life" on it. I don't know if that's just their branding.

What confuses me further is it has a figure for how much pension she would get at 65 (assuming she left the company now, and they find a cure for cancer), and this is less than the survivor's pension.

Do the death in service figures assume that she lives to 65?

EDIT: It looks like it's Mercer, and the death in service figures are after retirement at 65.

Cheers,
Andy

Albermarle

AP3 said:

Thanks for your reply and your sympathies Silverytabby.

The statement just has her Employer's name, and "Future Life" on it. I don't know if that's just their branding.

What confuses me further is it has a figure for how much pension she would get at 65 (assuming she left the company now, and they find a cure for cancer), and this is less than the survivor's pension.

Do the death in service figures assume that she lives to 65?

EDIT: It looks like it's Mercer, and the death in service figures are after retirement at 65.

Cheers,
Andy

Sorry for you and your wife's situation.

Mercer are a pensions administrator , they run multiple different company schemes , all with different rules .
Can you say who your wife's employer is ? If it is a large organisation someone might be familiar with the scheme .

AP3

Hi Albermarle,

I can't really post the company name as it would be quite easy to identify her. It is a large US company. I found some information online and it seems that it's just the lump sum that I would be eligible for.

Cheers,
Andy

jamesd

Is it

A. a final or average salary defined benefit scheme? If it's this type, is it government or private sector and if government is it the local government pension scheme or some other funded scheme that allows transfers out?

B. a defined contribution scheme with a pot of money and investments. Mercer being involved suggests that it's most likely to be this type but they are also heavily involved in many of the other type so that's not close to being sure.

If it's B the situation is very clear and simple: the death benefit is a transfer of her pension pot to your name from which you can withdraw any amount tax free whenever you like. No 25% limit and no age 55 requirement, a baby (via their trustee, usually parent) can withdraw for their benefit. The same applies to any children who might be named in an expression of wishes form, which is how she tells the scheme administrators who she wants to get the money. If she hasn't done that it'll normally be a spouse (or other legal relationship) and children, likely nothing to common law anyone.

If it's B and her doctors say her life expectancy is less than a year she also has the option of taking the whole pot tax free herself at any age, as a "serious ill health lump sum". No 25% limit and no age 55 requirement. If the pot is substantial it's likely to be best to leave at least most of it to be inherited. There's no requirement to return the money if she does live longer.

If it's A and the scheme is an unfunded government scheme like civil service or NHS you and perhaps children get whatever the scheme rules say.

If it's A and private sector or funded government scheme a financial adviser is likely to be needed to compare the benefits inside the scheme with the benefits that can be obtained by transferring out. Sometimes there can be low death benefits but an excellent transfer value.

Her will and usual inheritance rules do not apply to pensions, which don't form part of someone's estate.

AP3

Thanks James. It is a private sector final salary scheme. I assume that the transfer value would involve putting the "money" into a pension in my name, payable like a normal pension at retirement age?

I'm a house husband, so my main concern is income. I'm a long way from retirement age.

Cheers,
Andy

jamesd

Yes, a transfer would involve her transferring to a personal pension with the type B benefits and then you inheriting that on her death, and./or her withdrawing some while alive.

Regrettably, you're in the most complex of the situations. She can ask for a transfer value, telling the scheme administrators of her situation and asking for a rough estimate if a proper transfer value can't be provided quickly. She and you can also look at the scheme's death benefits and then it'll be possible to compare the options.

Telling the administrators her situation is important, in some cases it could take many weeks or months to get a proper value and a transfer could take that or longer. Best to get stated as soon as you're both able to handle it.

If you tell us those things we might give some idea but it's highly likely that a financial adviser is going to be needed to do the job properly.

If a transfer looks best she's in one of the situations where it's likely to be easy to get a recommendation to transfer. It's likely to be a fairly clear-cut decision, particularly if the death benefits are poor.

Shouldn't be a problem finding a local IFA willing to do the job, start out by saying something like "Stage 4 cancer, in a private sector defined benefit scheme, want a comparison and advice between staying in and taking death benefits and transferring out to a personal pension". That rapidly tells them that it's likely not to be a troublesome transfer case except perhaps needing fast work.

AP3

Thanks James, that's very helpful.

I haven't broached the "what happens after" with her yet. We still have treatments to try etc.

Once treatment is started, I will do.

Cheers,
Andy

Albermarle

AP3 said:

Thanks James, that's very helpful.

I haven't broached the "what happens after" with her yet. We still have treatments to try etc.

Once treatment is started, I will do.

Cheers,
Andy

It would still be a good idea to identify an IFA that you could work with in advance. Many are not qualified to advise on pension transfers . They will not charge you for an initial chat .

MallyGirl

I am very sorry for the position you find yourselves in.
I wouldn't wait around to look at transferring - it can be a slow process. A good friend is going though this right now with a terminal diagnosis. Her consultant was fine with issuing a letter saying that she had less than 12 months as this seems to be the trigger for a positive transfer and she wanted to get everything sorted asap. It is hoped that she has longer.