State Pension and Death before retirement

Torry_Quine

Yes it seems hard and my husband died many years before his pension age too. Individuals though don't put their NI contributions into a pot for when they retire.

55ryan

Sorry for your loss.

I claimed a portion of my pension at the age of 55 quite simply because I was seeing too many around me my age dying. Even since my last post a relative went to see his friend and found he had passed away at the age of 56. In my case I know I would lose an element by claiming 5 years early, but for me that is over ridden by having benefit of the monies now. None of us know how long we have so I claimed pro rata on what I am 'due'.

As for the state pension, there were typically two complaints I used to deal with about that in a previous job. 1. Why does my estate get nothing if I die before SPA and 2. Why is it taxable. As others have said, there is no pot of money there for state pensions. Initially when it was set up the government put some in to kickstart it off, but beyond that us workers now pay for the pensions of 84 year old Gladys and 67 year old Bert. When, if I get to 67, I claim my state pension. my nephew for example will be paying for my pension.     

As the state pension age rises there will be many more 'complaints' like this. We will have people 'paying in' for half a century. They get hit by a bus and they and their estate get no state pension of any kind. But there are older people who have had far more out than they paid in. I know a lovely lady of nearly 99 who has been getting her state pension for 39 years.

Life can be cruel. None of us know how long we have, but that's life. Most things we pay for be it car insurance, state pension (NI), house insurance, council tax are insurances in case we need it. 

I wish you and your family all the best. 

Albermarle

I claimed a portion of my pension at the age of 55 quite simply because I was seeing too many around me my age dying. Even since my last post a relative went to see his friend and found he had passed away at the age of 56.

It seems that a friend/relative dying at a 'young ' age, clouds people's ability to be objective about life expectancy.

Luckily we have hard statistics to counter that. A 55 year old man can expect to live on average another 28/29 years. That means 50% will live longer than that, and if you have no serious health problems, are financially comfortable, have had a non manual job, and are reasonably well educated, then the chances are that you could well be in that 50% and have a good chance of reaching 90. 

wjr4

Silvertabby said:

Flugelhorn said:

 the comment "She worked all her life and paid NI contributions" in relation to the state pension is not really relevant - NI is just another tax.

I added up how much NI I paid over the years I worked and it came to about £90,000 - how many years pension does that actually equate to ? not many and I was a high earner - most people will not have paid as much - the system relies on people a) not claiming  b) the costs being paid by the current working generation  

My sympathies on the loss of your mum, but this is the way all pension schemes work, not just the State.  The number crunchers work out that promising to continue to pay pensions to those who live to 90 or even 100 has to be funded by the contributions of those who, sadly, died early.

Not all pension schemes work like this. Defined contribution schemes do not.

Silvertabby

wjr4 said:

Silvertabby said:

Flugelhorn said:

 the comment "She worked all her life and paid NI contributions" in relation to the state pension is not really relevant - NI is just another tax.

I added up how much NI I paid over the years I worked and it came to about £90,000 - how many years pension does that actually equate to ? not many and I was a high earner - most people will not have paid as much - the system relies on people a) not claiming  b) the costs being paid by the current working generation  

My sympathies on the loss of your mum, but this is the way all pension schemes work, not just the State.  The number crunchers work out that promising to continue to pay pensions to those who live to 90 or even 100 has to be funded by the contributions of those who, sadly, died early.

Not all pension schemes work like this. Defined contribution schemes do not.

They do if the DC pot was/is used to buy an annuity.  I know annuities have fallen out of favour now, but that's the route most pre 2015 retirees will have gone down.

But, yes, I agree that I should have said 'most' instead of 'all'.

IAMIAM

This is exactly why I always recommend retiring early. IE 60/58 and would always take actuarial reduction and reduced benefits. This post is typical of what a lot of what friends and family have experienced....Especially civil service friends. Pension died and State Pension died with them. No transfer out of benefits allowed. 

QrizB

IAMIAM said:

This is exactly why I always recommend retiring early. IE 60/58 and would always take actuarial reduction and reduced benefits. This post is typical of what a lot of what friends and family have experienced....Especially civil service friends. Pension died and State Pension died with them. No transfer out of benefits allowed. 

If I'm reading these right (and I might not be) an average man aged 50 has roughly a 10% chance of dying before reaching 65. Are your friends and family all base-jumpers or cave divers or something?

Retiring early on reduced benefits is great if you can afford to do so, not so great if you can't.

Retiring early doesn't change the position re. State Pension.

Civil service friends in a DB scheme will leave a dependent' pensions to any dependents.

SouthCoastBoy

Albermarle said:

I claimed a portion of my pension at the age of 55 quite simply because I was seeing too many around me my age dying. Even since my last post a relative went to see his friend and found he had passed away at the age of 56.

It seems that a friend/relative dying at a 'young ' age, clouds people's ability to be objective about life expectancy.

Luckily we have hard statistics to counter that. A 55 year old man can expect to live on average another 28/29 years. That means 50% will live longer than that, and if you have no serious health problems, are financially comfortable, have had a non manual job, and are reasonably well educated, then the chances are that you could well be in that 50% and have a good chance of reaching 90. 

I think genetics also have a large part to play.

Linton

SouthCoastBoy said:

Albermarle said:

I claimed a portion of my pension at the age of 55 quite simply because I was seeing too many around me my age dying. Even since my last post a relative went to see his friend and found he had passed away at the age of 56.

It seems that a friend/relative dying at a 'young ' age, clouds people's ability to be objective about life expectancy.

Luckily we have hard statistics to counter that. A 55 year old man can expect to live on average another 28/29 years. That means 50% will live longer than that, and if you have no serious health problems, are financially comfortable, have had a non manual job, and are reasonably well educated, then the chances are that you could well be in that 50% and have a good chance of reaching 90. 

I think genetics also have a large part to play.

Smoking and working in bad conditions possibly more so.  Your parents/grand parents dying relatively young may have more to do with their lifestyle than their genes.  It would be foolish to overspend your savings in early retirement on the basis of your relation's age at death. 

Albermarle

Linton said:

SouthCoastBoy said:

Albermarle said:

I claimed a portion of my pension at the age of 55 quite simply because I was seeing too many around me my age dying. Even since my last post a relative went to see his friend and found he had passed away at the age of 56.

It seems that a friend/relative dying at a 'young ' age, clouds people's ability to be objective about life expectancy.

Luckily we have hard statistics to counter that. A 55 year old man can expect to live on average another 28/29 years. That means 50% will live longer than that, and if you have no serious health problems, are financially comfortable, have had a non manual job, and are reasonably well educated, then the chances are that you could well be in that 50% and have a good chance of reaching 90. 

I think genetics also have a large part to play.

Smoking and working in bad conditions possibly more so.  Your parents/grand parents dying relatively young may have more to do with their lifestyle than their genes.  It would be foolish to overspend your savings in early retirement on the basis of your relation's age at death. 

Taking benefits/DB scheme early, does not necessarily mean you will overspend your money too early.
Some may in fact put the pension income into investments, or just save it, or the reduced income may be enough to live off sustainably. 
Of course human nature being what it is, and especially if they are the type who feels that they will probably die 'before their time' because a couple of friends/relatives did, then there will be a good chance that some will overspend early, and then live to a grand old age, and end up a bit skint.