Pension beneficiary advice

bpk101

Hi,

I've just opened a SIPP with Vanguard UK and it's asking me who i'd like to add as a beneficiary.

Who should i add and is there anything i should be aware of with regards to adding beneficiaries?

FYI... I'm married with a 2 year old child and another child due in 12 weeks.

Thanks.

coyrls

For most people in your situation it would be their wife but that may possibly not apply to you, I don't know because you haven't told us.

Marcon

bpk101 said:

Hi,

I've just opened a SIPP with Vanguard UK and it's asking me who i'd like to add as a beneficiary.

Who should i add and is there anything i should be aware of with regards to adding beneficiaries?

FYI... I'm married with a 2 year old child and another child due in 12 weeks.

Thanks.

Add whoever you want the beneficiary to be if there are funds in your SIPP when you die. Make sure you also include an alternative in case the person(s) you name either die before you or (sorry for the horrid thought) at the same time, such as a car crash. Sadly it happens.

Keeping the form up to date is often overlooked, but a very good idea for obvious reasons.

bpk101

Ok thanks, i've added my wife at 100%.

It didn't allow me to add an alternative beneficiary in case of death, only additional beneficiaries who share the total fund value. 

dunstonh

It didn't allow me to add an alternative beneficiary in case of death, only additional beneficiaries who share the total fund value. 

Most providers will accept an added page where you write your wishes.   The standard form just covers the basic.

Marcon

dunstonh said:

It didn't allow me to add an alternative beneficiary in case of death, only additional beneficiaries who share the total fund value. 

Most providers will accept an added page where you write your wishes.   The standard form just covers the basic.

...and when you do, point out to them that their form would be a lot more efficient if it prompted for an alternative, rather than relying on someone to think of it themself. Most people don't, because it's unfamiliar territory and it simply doesn't occur to them as either a possibility, let alone a necessity.

zagfles

Marcon said:

dunstonh said:

It didn't allow me to add an alternative beneficiary in case of death, only additional beneficiaries who share the total fund value. 

Most providers will accept an added page where you write your wishes.   The standard form just covers the basic.

...and when you do, point out to them that their form would be a lot more efficient if it prompted for an alternative, rather than relying on someone to think of it themself. Most people don't, because it's unfamiliar territory and it simply doesn't occur to them as either a possibility, let alone a necessity.

Why do you think it's a necessity, assuming no complicated circumstances and OP would like his kids to be beneficiaries if he and his wife died at the same time (which is actually very rare). What else do you think the provider would do? 

If OP has an ex spouse, kids from previous relationships etc then it's important. Or if unmarried. Also when kids reach adulthood it may be worth reviewing when they would no longer be "dependants", it can be an idea to nominate them. But for now I don't think it's important. Unless I've missed something?

midlandsimon

The scheme administrator will provider you with a nomination of beneficiaries to complete. On the result of your death, the surviving trustee and administrator of the scheme will administrate the death benefits. The more information they have the better. I would recommend noting your main beneficiary and then alternative beneficiaries also if say you and the noted beneficiary die in a car crash together (sorry horrible thought!). Better to note and provide all names involved. This can be updated at any point in the future. 

Silvertabby

Ask your pension scheme if they will accept 'alternatives'.  The LGPS I worked for didn't, as they wanted to avoid the possibility of the trustees having to get involved.  Some people live complicated lives....

The usual choice would be 100% to your wife or a split of some description between your wife and children.  Yes, you and your wife could die together - but the odds of that happening really are miniscule.  In my 20 years as a LGPS administator, in a scheme with many, many Ks of members, I've only known that scenario once (sad case of an elderly pensioner who had a stroke at the wheel).

100% to your wife is the simplest.  That way all of the money is hers to use to help take care of your children.  Leave portions to the children, however, and their money would be placed in trust for them until they are 18.  Of course, this wouldn't be an issue if your wife has enough money of her own to take care of them all, but that is something that only you can answer.

Malthusian

bpk101 said:

Ok thanks, i've added my wife at 100%.

It didn't allow me to add an alternative beneficiary in case of death, only additional beneficiaries who share the total fund value. 

The usual workaround is to nominate nominal 1% shares to the children.

However that is usually only necessary for estate planning purposes, to give more flexibility if the widow(er) wants to decline some or all of their share and let it go to the adult children instead, as a nominee drawdown plan.

In the absence of a complicated family history, it is not necessary for the "husband and wife die in the same car crash" scenario where the next in line are minor children. In that case the trustees would just split it between the children, who would have the option of a dependent's drawdown plan.