Survivor's Pension

xylophone

Do you have dependent children who would also be eligible for benefits from the scheme?

Have you asked Mercer for a scheme booklet?

jamesd

One other thing that an IFA can help with is inheritance tax.

While normally pensions aren't part of a person's estate they are very likely to be if there was a transfer within two years before death and the chance was known at the time. In this specific situation it can be best not to allow the trustees of the personal pension discretion but instead "I direct you to pay all benefits to my spouse xxx with no exercise of discretion. For information, this is to minimise potential inheritance tax liability in the event that I do not survive two years." a spouse inherits free of inheritance tax anyway s saying spouse eliminates that being part of the inheritance tax situation.

AP3

Thanks All. We don't have any children, just a couple of dogs that keep us busy.

I checked the statement they send out, and both the lump sum and survivor's pension estimates are indeed based on working until 65. We'll need to ask them for an estimate for how much the lump sum would be now, as it seems the survivor's pension is only an option after retirement age (and would be in lieu of the lump sum).

I have a friend who works with pensions, so I'll ask her to investigate further, and look for a local IFA.

Cheers,
Andy

Albermarle

I have a friend who works with pensions, so I'll ask her to investigate further, and look for a local IFA.

Unless your friend is really a pensions expert and not just somebody who works in a pensions office , I would be careful .

Your situation is potentially quite complicated and involves more than just pensions.

xylophone

 as it seems the survivor's pension is only an option after retirement age (and would be in lieu of the lump sum).

Do you have a scheme guide/copy of the Scheme Rules which actually states this?

AP3

xylophone said:

 as it seems the survivor's pension is only an option after retirement age (and would be in lieu of the lump sum).

Do you have a scheme guide/copy of the Scheme Rules which actually states this?

This is what it says:

■ If you die after you are eligible to retire, your surviving spouse will receive 50 percent of the monthly benefit you would have received under a single life annuity had you retired on the date of your death

■ If you die before you are eligible to retire but after you have vested, your surviving spouse will receive 50 percent of the deferred vested benefit you had accrued as of the date of your death

Am I right in what I thought?

Albermarle, my friend works in HR at a subsidiary of my wife's company, and is a trustee of the pension plan. Maybe not an expert, but would be able to explain things I hope.

Cheers,
Andy

Silvertabby

AP3 said:

xylophone said:

 as it seems the survivor's pension is only an option after retirement age (and would be in lieu of the lump sum).

Do you have a scheme guide/copy of the Scheme Rules which actually states this?

This is what it says:

■ If you die after you are eligible to retire, your surviving spouse will receive 50 percent of the monthly benefit you would have received under a single life annuity had you retired on the date of your death

■ If you die before you are eligible to retire but after you have vested, your surviving spouse will receive 50 percent of the deferred vested benefit you had accrued as of the date of your death

Am I right in what I thought?

Albermarle, my friend works in HR at a subsidiary of my wife's company, and is a trustee of the pension plan. Maybe not an expert, but would be able to explain things I hope.

Cheers,
Andy

'Vested' usually means that the pension fund member has accrued the minimum amount of service/membership necessary to qualify for pension benefits.

In the UK, that is usually either 3 months or 2 years - but if this is an American based pension fund, then a different vesting period may apply.  Is this mentioned somewhere else in the rules?

It's the norm for UK pensions to pay surviving spouse benefits from the date of death, regardless of age.  From memory, the youngest surviving spouse pension I administered was to a 26 year old who received an enhanced pension for life.  But, again, American pension rules may differ.