Defined Benefit Survivors Pension Lump Sum

kgx3

Hello, 

Looking for some advice regarding a defined benefit survivors pension.

My father in law medically retired roughly 13 years ago and had been receiving his pension quarterly since (and received a lump sum initially when he first retired). My father in law passed away back in may and my mother in law has since been told she is entitled to a survivors pension. She was told her annual figure of £1874 and advised she may be able to commute it to a lump sum. When she requested this, they advised that the value of the pension+benefits was £35k not which was over the £30k meaning she could not get a trivial commutation lump sum and her only choice is to receive it annually.

For many personal reasons, she would rather receive a lump sum of some form but we are unsure if we have any alternative options. Could we voluntarily give up benefits to reduce to the £30k? Could we settle the pension for a lesser figure than entitlement? Could we transfer it to another scheme? 

Any help would be greatly appreciated as we are at a loss!

HappyHarry

It is unlikely that your mother-in-law will be able to commute this to a lump sum. However, an inflation linked pension is not a bad thing to be receiving in its place.

Silvertabby

There's no way round this, I'm afraid.  The pension can't be reduced or transferred out, and is too high to be commuted.  Would taking the pension monthly help?

kgx3

Taking it monthly wouldn’t be beneficial to her either. We have asked the pension provider if there are any alternatives like us settling for less than our entitlement which they have said they will go away and look at it but I wasn’t getting my hopes up.

kgx3

Could she transfer it within the pension scheme to a defined contributions scheme? 

QrizB

kgx3 said:

Could she transfer it within the pension scheme to a defined contributions scheme? 

Unlikely, as the pension is already in payment.

Marcon

kgx3 said:

Hello, 

Looking for some advice regarding a defined benefit survivors pension.

My father in law medically retired roughly 13 years ago and had been receiving his pension quarterly since (and received a lump sum initially when he first retired). My father in law passed away back in may and my mother in law has since been told she is entitled to a survivors pension. She was told her annual figure of £1874 and advised she may be able to commute it to a lump sum. When she requested this, they advised that the value of the pension+benefits was £35k not which was over the £30k meaning she could not get a trivial commutation lump sum and her only choice is to receive it annually.

For many personal reasons, she would rather receive a lump sum of some form but we are unsure if we have any alternative options. Could we voluntarily give up benefits to reduce to the £30k? Could we settle the pension for a lesser figure than entitlement? Could we transfer it to another scheme? 

Any help would be greatly appreciated as we are at a loss!

I'm afraid the answer is 'no' to all the above. The pension scheme isn't being deliberately unhelpful; their hands are tied, so 'going away and looking' at your suggestion you settle for less than your MIL's entitlement isn't likely to get a positive answer. I suspect they are doing it purely to ensure you realise they've tried to help but genuinely can't.

xylophone

See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm073700#:~:text=Where a dependants' pension is,be paid that guaranteed pension.

The maximum amount that can be paid from a scheme as a trivial commutation lump sum death benefit is £30,000.