Move to new pension scheme but lose spouse pension benefit?

sandsy

There are employers offering DC where the employer pays for an insured spouse's pension on top. My employer offered the same until very recently. But they withdrew the spouse's pension due to the increasing cost of insuring it. They upped the life insurance to 8x salary as compensation, in exactly the same way as the OP's employer. 

It doesn't adequately compensate for some employees, especially younger ones where early death would result in a longer period of spousal pension payments. On the other hand, the probability of death is lower for younger employees.

Marcon

real_sunfire said:

What are people's opinions here: should I move to the new scheme and get the increased death in service cover and larger amount to spend on additional benefits or should I stay in the old scheme and retain the spouse pension?

Thanks.

S

Other people's opinions aren't really relevant. What matters is what you and your wife prefer and what suits your circumstances/attitude to risk. With so little information (?age?other savings?other life cover) it's impossible to speculate in any meaningful way.

Best bet is to sit down with your wife, review your whole financial situation and then take a decision on what matters most: more money to spend on benefits and a larger DIS lump sum; or a guarantee of healthy financial security for her (and thus your son).

real_sunfire

Thanks for everyone's responses - sorry if I have confused some people.

Just to confirm both schemes are DC.

My wife and I are both in our early 50s. We don't have much in terms of long term savings apart from our pension pots, including ones from previous employers, but we do each have separate life cover to pay off our mortgage. 

The extra 4 x death benefit would be about twice her current pension pot. Break even point - the benefit of having the spouse pension would outweigh the extra 4x death benefit - would be about 13 years.

My wife feels fine with losing the spouse pension given the situation with the additional benefits.

I'm leaning towards moving to the new scheme so I can actually afford the additional benefits I would want.

dunstonh

My wife feels fine with losing the spouse pension given the situation with the additional benefits.

How will you be buying your retirement income with this new pot?  scheme pension, annuity or drawdown?

real_sunfire

dunstonh said:

My wife feels fine with losing the spouse pension given the situation with the additional benefits.

How will you be buying your retirement income with this new pot?  scheme pension, annuity or drawdown?

To be honest I'm not sure yet. I'm still at least nearly 20 years away from retirement (health permitting).

S

dunstonh

real_sunfire said:

dunstonh said:

My wife feels fine with losing the spouse pension given the situation with the additional benefits.

How will you be buying your retirement income with this new pot?  scheme pension, annuity or drawdown?

To be honest I'm not sure yet. I'm still at least nearly 20 years away from retirement (health permitting).

S

How you buy your retirement income matters in respect of spouse provision.  if you use drawdown then your spouse will inherit your pension pot if you have her named as beneficiary.    If you use annuity, then you choose the annuity death benefits.     If you use a scheme pension then you are limited to what that offers.   

So, whilst you are worrying about spouse benefits, it may be something you don't need to worry about at all.