Pension beneficiaries

Herts22

My father died over a decade ago aged 67 after teaching all his life. Myself and my siblings assumed that all the money he paid into his pension had been lost as our mother predeceased him and we believed that a pension could only be transferred to a spouse. We were not contacted by the pension provider.

I've recently reached retirement age myself and have realised that I can in fact nominate someone besides a partner to receive my pension benefits. I'm wondering what the situation is where someone dies without having nominated a beneficiary - is it possible for pension benefits to still be transferred? And if yes, is there a time limit for this process?

Thanks for any advice.

Andy_L

As a teacher your father was likely to be a member of the Teachers Pension Scheme. This is a public sector defined benefit (DB) scheme.
AIUI the scheme rules only allow a nomination to a financially dependent relative rather than anybody. A spouse doesn't need a nomination as they automatically get it.

dunstonh

Pensions are not all equal.  There are many types of pension.   The death benefits vary with the different types.

You also have benefits based on death before retirement and death after retirement and the options selected.

The teachers pension scheme is a defined benefit scheme (DB).  Most people today outside of the public sector have defined contribution pensions (DC).   DB is based on years of service and has no fund.   DC is investment based and has a pot of money.

With DC schemes, the death benefits are usually more favourable to those on DB schemes (caveats apply for various scenarios).

   I'm wondering what the situation is where someone dies without having nominated a beneficiary 

If it's a DC scheme, it will still pay out the fund value to someone.  The trustees will ask about family members and dependents and decide who should get it or how it is split between them.

 - is it possible for pension benefits to still be transferred?

Yes for DC schemes.  

 And if yes, is there a time limit for this process?

There are potential tax issues on timing but apart from that no.  It is more down to the type of pension it is.

Rather than respond with a very very long email covering all scenarios and types, it would be easier to ask what type of pension you have and how you intend to draw your income in retirement?  (the second bit is because death benefits will vary on the method you use in retirement).

Silvertabby

Teacher's Pensions (TPS), like other public sector pensions, pay a death grant (in the form of one-off tax free lump sum) if the fund member dies before starting to draw their pension or within a set time scale afterwards.  This is in addition to a spouse's pension, if one is due, and may be paid to any nominated beneficiary.

If your father retired at 60 (or earlier) then he would have been in receipt of his teacher's pension for more than 5 years, and so would have been outside the guarantee period for the death grant.

TPS do pay children's pensions, but only under certain circumstances.  The usual being up to age 18, or age 23 if still in full time education.  A disabled child could be awarded a dependant's pension for life, but this is rare.

Albermarle

With a DB scheme, like the teachers pension, you get a guaranteed income for life. In crude terms the ones who die early, help to pay for the ones who live to a ripe old age . 
With a DC scheme you have a pot of money that is yours. If you spend it too quick , it will run out. If there is some left when you die it can be passed on , like an inheritance.

Overall DB schemes are much better due to the lifetime guaranteed income and they cost the employer a lot more to run than a typical  DC scheme. However DC schemes do have this advantage of being able to pass on any residue when you die.

Herts22

dunstonh said:

Pensions are not all equal.  There are many types of pension.   The death benefits vary with the different types.

You also have benefits based on death before retirement and death after retirement and the options selected.

The teachers pension scheme is a defined benefit scheme (DB).  Most people today outside of the public sector have defined contribution pensions (DC).   DB is based on years of service and has no fund.   DC is investment based and has a pot of money.

With DC schemes, the death benefits are usually more favourable to those on DB schemes (caveats apply for various scenarios).

   I'm wondering what the situation is where someone dies without having nominated a beneficiary 

If it's a DC scheme, it will still pay out the fund value to someone.  The trustees will ask about family members and dependents and decide who should get it or how it is split between them.

 - is it possible for pension benefits to still be transferred?

Yes for DC schemes.  

 And if yes, is there a time limit for this process?

There are potential tax issues on timing but apart from that no.  It is more down to the type of pension it is.

Rather than respond with a very very long email covering all scenarios and types, it would be easier to ask what type of pension you have and how you intend to draw your income in retirement?  (the second bit is because death benefits will vary on the method you use in retirement).

Many thanks for this detailed response. I'm assuming my father had a teachers pension as he taught in higher education at the same institution most of his working life. I'll need to look into it further and identify the pension provider. Like a lot of lecturers, he didn't work full-time so I don't know how much pension he would have accrued.

Herts22

Silvertabby said:

Teacher's Pensions (TPS), like other public sector pensions, pay a death grant (in the form of one-off tax free lump sum) if the fund member dies before starting to draw their pension or within a set time scale afterwards.  This is in addition to a spouse's pension, if one is due, and may be paid to any nominated beneficiary.

If your father retired at 60 (or earlier) then he would have been in receipt of his teacher's pension for more than 5 years, and so would have been outside the guarantee period for the death grant.

TPS do pay children's pensions, but only under certain circumstances.  The usual being up to age 18, or age 23 if still in full time education.  A disabled child could be awarded a dependant's pension for life, but this is rare.

Many thanks for this. He retired aged 66 and did in fact continue to do some occasional work at the university following retirement. He died around the time of his 67th birthday in March so would have drawn pension for less than 12 months.

Herts22

Albermarle said:

With a DB scheme, like the teachers pension, you get a guaranteed income for life. In crude terms the ones who die early, help to pay for the ones who live to a ripe old age . 
With a DC scheme you have a pot of money that is yours. If you spend it too quick , it will run out. If there is some left when you die it can be passed on , like an inheritance.

Overall DB schemes are much better due to the lifetime guaranteed income and they cost the employer a lot more to run than a typical  DC scheme. However DC schemes do have this advantage of being able to pass on any residue when you die.

Thanks a lot for this. The HE institution he worked for has gone through a few permutations but is still in existence. I'm wondering whether it is the institution or the pension provider I should be contacting for more information.

Silvertabby

Herts22 said:

Silvertabby said:

Teacher's Pensions (TPS), like other public sector pensions, pay a death grant (in the form of one-off tax free lump sum) if the fund member dies before starting to draw their pension or within a set time scale afterwards.  This is in addition to a spouse's pension, if one is due, and may be paid to any nominated beneficiary.

If your father retired at 60 (or earlier) then he would have been in receipt of his teacher's pension for more than 5 years, and so would have been outside the guarantee period for the death grant.

TPS do pay children's pensions, but only under certain circumstances.  The usual being up to age 18, or age 23 if still in full time education.  A disabled child could be awarded a dependant's pension for life, but this is rare.

Many thanks for this. He retired aged 66 and did in fact continue to do some occasional work at the university following retirement. He died around the time of his 67th birthday in March so would have drawn pension for less than 12 months.

He could have been in the USS (University pension scheme) rather than TPS, but they had similar rules re death grants back then.  

Had a death grant been due, then that would have/should have been addressed when TPS/USS were informed of your father's death.

This brings me to believe that your father may have chosen to pay into a private (DC) scheme, and that he may have opted to take an annuity which then died with him.....

Are you able to search through your father's paperwork/bank details to see who exactly paid his pension?

bostonerimus

The USS scheme has gone through a lot of changes recently and the type of pension you get depends on when you started work. So the OP will need to find out if it was a USS scheme or TPS DC or DB etc.

If it was a DB scheme there are usually options for single life or joint life that would include your spouse. A scheme might also allow you to nominate another beneficiary to get a lump sum or lifetime benefit if you die early, but you'd have to take a reduced pension for that. Usually a married person will take the joint life option so the surviving spouse keeps getting some pension.

Herts22

Silvertabby said:

Herts22 said:

Silvertabby said:

Teacher's Pensions (TPS), like other public sector pensions, pay a death grant (in the form of one-off tax free lump sum) if the fund member dies before starting to draw their pension or within a set time scale afterwards.  This is in addition to a spouse's pension, if one is due, and may be paid to any nominated beneficiary.

If your father retired at 60 (or earlier) then he would have been in receipt of his teacher's pension for more than 5 years, and so would have been outside the guarantee period for the death grant.

TPS do pay children's pensions, but only under certain circumstances.  The usual being up to age 18, or age 23 if still in full time education.  A disabled child could be awarded a dependant's pension for life, but this is rare.

Many thanks for this. He retired aged 66 and did in fact continue to do some occasional work at the university following retirement. He died around the time of his 67th birthday in March so would have drawn pension for less than 12 months.

He could have been in the USS (University pension scheme) rather than TPS, but they had similar rules re death grants back then.  

Had a death grant been due, then that would have/should have been addressed when TPS/USS were informed of your father's death.

This brings me to believe that your father may have chosen to pay into a private (DC) scheme, and that he may have opted to take an annuity which then died with him.....

Are you able to search through your father's paperwork/bank details to see who exactly paid his pension?

Many thanks for the distinction between USS and TPS. I think he would have gone for one of those schemes rather than private as he wasn't particularly brilliant on the financial management side. Any existing paperwork will be with my sister who lived local to my father at the time of his death. I'll check to see if she's still got documentation.