Widow and Pension

Marmaduke123

Richie7 said:

Sarahspangles said:

GrubbyGirl_2 said:

We found Age UK brilliant at helping my mother make sure she was claiming everything she was entitled to.  Get in touch with them they will sit down and go through things with her, and they also kept in contact with her as benefits changed

Age UK, or Citizens Advice may help.  

If you used ‘Tell Us Once’ after her husband died, this stops them paying his pension so that there isn’t an overpayment.  However we weren’t clear when FIL aided whether a review of MIL’s pension had been automatically triggered so we contacted the Pensions Service rather than wait to find out.  Then checked her benefits position.

Can I ask did that yield anything? My mum is convinced they will automatically pay her more if she is entitled to it. But I said I'll bet that always doesn't just happen.

I didn't contact the Pensions Service on my own behalf after my husband died, as I had no expectation that I would receive anything extra. In fact, I received extra payments automatically, beginning just under 2 months after my husband's death. You may well be right that this doesn't always happen as it should though!

sheramber

My son contacted th4 Pension Service on my behalf and they  confirmed  I was due something from my late husband's pension. 

they said it would be done automatically but may be a delay so they actioned  it and I receivd it shortly after.

Richie7

Thanks for those responses everyone. All been very helpful.

Richie7

So here is an update and then another question if that's okay.

Firstly an apology though, as I put in the first post of this thread my mum received £80 per month. It was actually £80 per week. 

Good news anyway, the HMRC contacted my mum and advised that she would be receiving £232 per week as of Monday. They included some convoluted calculation based on what my dad had paid, but she's happy that she will be able to cover the bills. For now anyway!


My further question concerns my dad's Annuity that we discovered. In relation to the above as well. It's only quite modest, but we don't have a lot of paperwork on it apart from what has been sent.

Basically they are offering my mum a small spouse's pension now of £426.72 per annum. Or a lump sum to close the policy of £3,213 which has had 20% tax deducted (£4,017 Gross).

Now the letter states that the tax can be claimed back. Am I correct in thinking however that she can only claim £500 back? Because of the new pension she will be receiving that takes up most of her personal allowance?

Whereas taking the annual payment wouldn't impact her personal allowance, so she wouldn't pay any tax on that?

And if she passed away in the next few years, I assume that the policy would just come to an end then and not be able to be passed in any way to myself or another sibling?


Sorry for all the questions again. I really appreciate all the assistance.

molerat

Yes in your assertions.  Is that annual pension fixed or increasing each year ?  One thing to bear in mind is that £426 pa will likely be taxed from next year as the personal allowance will not be increasing and that SP amount will likely be more than  the full  PA.

Sarahspangles

As this is an annuity I wonder if your mum’s life expectancy was used in the original calculation.  You mentioned there was a slightly wider age gap than the average, at six years.  

Brie

So glad she's been told about the higher amount being paid.  Sometimes the system actually works!!!  

I don't have the answers but will make a few comments if I may. 

Well if you do the maths on the annual vs lump sum....the lump sum is about 8 times the annual amount.  You say she's 76.  So to be blunt...how's her health?  How likely is she still to be kicking about in 8 years?  That might make it worth while to take the larger sum now, use it to have a trip she might not manage in a couple/few of years, take care of some bills or get that new boiler or whatever.  

The other thing to look at if she is a bit frail is whether she could get attendance allowance.  The sad truth is that some widows (& widowers) decline following the death of a partner of many decades (which I assume might be the case here).  My MiL was not too bad before FiL died but became less and less able after.  Having people coming in to help her at little cost to herself kept her much livelier than would have been the case otherwise.  So getting that £60+ a week extra to cover a cleaner or friendly face popping in every week or every few days was a really good thing and something she might have considered extravagant with AA being paid to help her cover it.  

Other things to consider if you haven't already is things like Power of Attorney (can take 6 months to set up but easy to do online).  Presumably she and dad had wills?  Now's the time if not to get hers sorted.  Also talking about what she'd like her next few years to be like.  Having been through this with the one person makes it both easy and hard to discuss.  An "easy" opener might be "what did you think of dad's service?" or chatting about how he was treated at the end.  I suggest you take notes and date them.  My mom even has a signed document that includes things about end of life and funeral service.  An relatively easy thing is to get a list of all her bills/cards/accounts and get a signed letter of authority so that you (or some suitable individual) can help her deal with things if she gets to a point where she's struggling - like a PoA but free and almost instantaneous.  Another thing is to get you (or someone) added to her bank accounts as third party authority which would allow "you" to deal with her banking online, have a debit card, withdraw money for her from the ATM etc.  Very handy when my MiL became much less mobile.  

Don't forget too to look after yourself as obviously your mom needs your help now and will continue to do so, hopefully for a very long time.

Richie7

molerat said:

Yes in your assertions.  Is that annual pension fixed or increasing each year ?  One thing to bear in mind is that £426 pa will likely be taxed from next year as the personal allowance will not be increasing and that SP amount will likely be more than  the full  PA.

It's actually fixed. I can't really find any paperwork on it though unfortunately so I've no idea of the original purchase.

Would she be able to change her mind and take the lump sum if she decided she wanted to at a later date? I assume the lump sum would decrease in value as the years pass.

Thanks @Brie for that long post, and as above @Sarahspangles I've no real idea what was done or considered at the time. I only have what they are telling me now.

xylophone

Now the letter states that the tax can be claimed back. Am I correct in thinking however that she can only claim £500 back? Because of the new pension she will be receiving that takes up most of her personal allowance?

I think that this is trivial commutation of a small dependant's pension.

See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm073700

How a trivial commutation lump sum death benefit is taxed

If your mother's only other income is SP, the 20% tax taken from the TC payment will mean that she has been overtaxed for the year - see above re reclaim.

Richie7

xylophone said:

Now the letter states that the tax can be claimed back. Am I correct in thinking however that she can only claim £500 back? Because of the new pension she will be receiving that takes up most of her personal allowance?

I think that this is trivial commutation of a small dependant's pension.

See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm073700

How a trivial commutation lump sum death benefit is taxed

If your mother's only other income is SP, the 20% tax taken from the TC payment will mean that she has been overtaxed for the year - see above re reclaim.

Thanks for that. 

I think I might have got this wrong. 

My mum isn't a basic rate taxpayer, as her only income is the SP. So am I right in thinking she can claim back the £500 or so, then the additional £300 she gets taxed on at 20% (the £300 being the amount that takes her over the threshold into basic rate).

I get so damn confused over how these things work, lol.