Orphaned Children and Pension Death Benefit

Rosie1560

I am in desperate need of help and advice.

In August of this year my brother unexpectedly died, leaving behind 2 daughters aged 10 and 12 - his wife had died in 2016.  

He has 4 pension schemes, but one in particular is proving to be problematic.

His NTL Pension Plan is operated by XPS Administration.  In September 2019 my brother received correspondence from NTL stating he could take an immediate sum of £44.143 and an annual pension of £6,622 and according to a review done in October 2019 worth over £300,000, however XPS have sent me the following:-

I can confirm that the Trustees have agreed to pay the death in deferment lump sum to (Removed by Forum Team) estate.The lump sum payable is £3,580.29, which represents a refund of contributions paid to the Plan by (Removed by Forum Team) with interest applied to his date of death.

I understand that this may be the Trustee's decision, but given the circumstances it seems harsh if not cruel to deny them their entitlement, especially given one of his daughters has a disability.  In 2017 following the death of his wife, my brother did nominate at least one of his daughters to benefit from his pension. I am also aware that in 2019 he did enquire about the benefits which may be payable to a child who is over the age of 23 and has a physical or mental impairment.  

Is this really only what they are entitled to or can I appeal?  Or is there another way forward?

xylophone

https://www.mypension.com/ntlplan/ntl-pension-plan/

Your brother had a "deferred" ("preserved") pension?

In September 2019 my brother received correspondence from NTL stating he could take an immediate sum of £44.143 and an annual pension of £6,622 

He did not take up this offer so that the pension remained deferred?


There is an old 1996 Members' Booklet available for download at the above link  (with a later (but still only 2011 update) - if your brother's pension was still deferred at the date of death, this seems relevant to  your query.

If you are entitled to a preserved pension but die before you have begun to receive it, you will receive a cash sum equal to any voluntary contributions which you have paid into a Money Purchase Scheme that you have not used to provide additional benefits for your Spouse or dependants, plus (if you have no spouse or dependants), a refund of your contributions. This sum will be  payable as explained in section four under "Lump Sums". Your Spouse/adult dependant will also receive one half of your preserved pension entitlement revalued to the date of your death.

If you have any dependent children at the date of your death, they will receive a pension equal to a proportion of the Spouse's pension. This will be the case whether or not you have a Spouse/ Adult Dependant or not. The proportions payable are the same as those described under the  section "Child Pension" in section 4.


Has there been no mention at all of pensions for the children?

Rosie1560

Hi there,

I'm afraid I do not know for sure if he had a deferred pension - there is so much paperwork relevant to this pension, including an assessment by a financial advisor in 2019, regarding whether this pension should be transferred to a new drawdown scheme, the advice includes the statement below:-

'If you take no further action the scheme pension will become payable at your normal retirement age, or later if you elect to defer at the time and the trustees agree to your request'. 

So I assume it was not deferred.  There has been no mention at all of a pension for the children.  However, in the advice he received there was a section which states that if he stayed in the scheme - which he did- additional pensions would be payable to dependent children only.

I just assumed that the children would have been entitled to more than the contributions made and as you have stated a pension equal to a proportion of the Spouse's pension.

Rosie1560

Sorry I think I have just understood your second question. 
I am sure he did not take up the offer of a lump sum.

zagfles

I presume the Trustees are aware of the children? But when did he work for NTL? Was is before the children were born? Looking at the definition of "child" in the booklet from the above link it says "...conceived or adopted before or during pensionable service...", which would imply a child born after he left service wouldn't be covered.

But it's worth getting an explaination from the trustees anyway, so maybe write to them? You can appeal to the pensions ombudsman but you'd have to go through the scheme's dispute process first.

Rosie1560

Yes, the Trustees are aware of the children and at least 1 child was born whilst he worked for NTL.
I have asked for an explanation for their decision and am awaiting their explanation.  Thank you for your help.

Marcon

Rosie1560 said:

I understand that this may be the Trustee's decision, but given the circumstances it seems harsh if not cruel to deny them their entitlement, especially given one of his daughters has a disability.  In 2017 following the death of his wife, my brother did nominate at least one of his daughters to benefit from his pension. I am also aware that in 2019 he did enquire about the benefits which may be payable to a child who is over the age of 23 and has a physical or mental impairment.  

If something is an entitlement, it can't be denied. The question to be resolved is exactly what the 'entitlement' is. There's no point appealing to the Pensions Ombudsman unless an entitlement is withheld, or a discretion has not been properly considered/exercised. Simply thinking something is harsh/cruel isn't sufficient for the PO to instruct the trustees to breach the rules of their scheme.

Don't go it alone. There is free, expert and sympathetic help readily available: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems

xylophone

Yes, the Trustees are aware of the children and at least 1 child was born whilst he worked for NTL.
I have asked for an explanation for their decision and am awaiting their explanation.  Thank you for your help.

Even a child conceived  and born before pensionable service would appear to be eligible for a child pension.

It would seem that a child conceived during pensionable service would also be eligible, even if  born after the parent left the scheme.

I hope that you will return with the Trustees' explanation.

Rosie1560

This is the reply I received from the company.

Under the Plan Rules, a spouse’s pension would have been payable, however, as (Removed by Forum Team) was a widower, this was not applicable.

Under the Plan rules, a child is only eligible to receive a child’s pension from the Plan if a child was born before a member ceased pensionable service.(Removed by Forum Team) ceased pensionable service on 27 January 2005 and as his daughters were born after this date, they are sadly, not eligible to receive a child’s pension under the Plan Rules.

Unfortunately, the Trustees may only pay benefits in line with the Plan Trust Deed and Rules.

Under the Rules of the Plan, a refund of contributions with interest is payable in the event of death in deferment.

I am now wondering if the issue I should now pursue is with the financial advisors - appointed by the pension company - to carry out a review of my brother's pension with the purpose of providing him with retirement options, as one of the key objectives was to 'leave benefits to children' and the advice was to remain in the scheme as additional pensions would be payable to dependent children only.

zagfles

Rosie1560 said:

This is the reply I received from the company.

Under the Plan Rules, a spouse’s pension would have been payable, however, as xxxx was a widower, this was not applicable.

Under the Plan rules, a child is only eligible to receive a child’s pension from the Plan if a child was born before a member ceased pensionable service. xxxx ceased pensionable service on xxxx and as his daughters were born after this date, they are sadly, not eligible to receive a child’s pension under the Plan Rules.

Unfortunately, the Trustees may only pay benefits in line with the Plan Trust Deed and Rules.

Under the Rules of the Plan, a refund of contributions with interest is payable in the event of death in deferment.

I am now wondering if the issue I should now pursue is with the financial advisors - appointed by the pension company - to carry out a review of my brother's pension with the purpose of providing him with retirement options, as one of the key objectives was to 'leave benefits to children' and the advice was to remain in the scheme as additional pensions would be payable to dependent children only.

If he had financial advice and the advice to stay in the scheme was because of the child benefits, then it sounds like the advisor was negligent in not establishing the facts, ie that the children wouldn't be covered. So could be worth a complaint - see here https://www.financial-ombudsman.org.uk/consumers/how-to-complain

PS please edit your post to remove personal details (I've editted my quote of it)

xylophone

an assessment by a financial advisor in 2019, regarding whether this pension should be transferred to a new drawdown scheme......

in the advice he received there was a section which states that if he stayed in the scheme - which he did- additional pensions would be payable to dependent children only.

Of course, as far as it goes, the  advice is perfectly accurate. The trouble is that as it stands, it does not go far enough.

Pensions are indeed payable to "dependent children"  as defined in the Glossary in the Scheme Booklet.

You say that the adviser in question was

appointed by the pension company 

One would then expect him to be fully cognisant of Scheme Rules and definitions and how they would affect the position of your brother's dependent children.

See the link to which zagfles (above) refers and make a formal complaint to the Adviser/his firm.