Does my Wife Get My Full Pension if I die?

williamc10

Hi, my wife's mother only received half of her husbands workplace pension after he died - is this normal? I have a number of workplace pensions that I want to ensure don't have similar terms - to everyones knowlege, are the lump sum and monthly pay amounts the same to the spouse of the deceased person's pension, or do payments reduce on death please? 

What_time_is_it

I don't know of any DB pension scheme that pays the same rate to a surviving spouse.

DullGreyGuy

williamc10 said:

Hi, my wife's mother only received half of her husbands workplace pension after he died - is this normal? I have a number of workplace pensions that I want to ensure don't have similar terms - to everyones knowlege, are the lump sum and monthly pay amounts the same to the spouse of the deceased person's pension, or do payments reduce on death please? 

Spouse benefits can be greater than first life (very rare but have seen it) all the way down to no benefits at all. You need to check the terms of the scheme. 50% is probably more common on DB schemes. 

If its a DC pension then its up to you what you do with the pot when you vest the pension... if you are to buy an annuity you choose what spousal benefit you want and that will impact how much you get during your life. 

gwynlas

It would be very unusual for it to be otherwise as people can have have spouses that could outlive them by many years. if you have concerns how your wife would manage on a reduced income regarding mortgage payments etc then you could take out critical illness and life insurance.

Flugelhorn

Most DB pensions are round about half but they all vary - none of them pay 100%

DullGreyGuy

gwynlas said:

It would be very unusual for it to be otherwise as people can have have spouses that could outlive them by many years. 

As you could outlive your spouse by many years... thats the fun of longevity risk. 

The reason why spousal benefits tend to be below first life is the balance between first life benefits/cost of the pension. Increasing the second life benefit either means eroding the first life benefits or increasing the money paid in.  For a DB scheme they have to consider the average scheme member, with DC life is easier because you can choose exactly what you want when you vest and your personal circumstances will be taken into account if you decide to buy an annuity. 

dunstonh

Hi, my wife's mother only received half of her husbands workplace pension after he died - is this normal?

Depends on the pension and the options selected or available.
A defined benefit pension in payment will often have a 50% spouse pension.
A defined contribution pension will have a greater range of options available.  However, DC pensions cost more to get the equivalent benefits of a DB pension.  So, swings and roundabouts.

Many defined benefit pensions were non-contributory or had very low contribution levels for much of the persons working life.   

I have a number of workplace pensions that I want to ensure don't have similar terms - to everyones knowlege, are the lump sum and monthly pay amounts the same to the spouse of the deceased person's pension, or do payments reduce on death please? 

Are they defined benefit pensions or defined contribution pensions?
If defined contribution, then you decide the death benefits.   Not the scheme.

Ayr_Rage

Flugelhorn said:

Most DB pensions are round about half but they all vary - none of them pay 100%

Oh yes they do @Flugelhorn and @What_time_is_it !

My wife would receive my whole pension entitlement for 10 years and 2/3 thereafter and that amount is what would have been my full pension disregarding the fact I took the maximum tax free lump sum.

@williamc10 you'll need to check each scheme as to what they pay.

Flugelhorn

should have said that some pay it for the balance of a period of years ! 

DullGreyGuy

Ayr_Rage said:

Flugelhorn said:

Most DB pensions are round about half but they all vary - none of them pay 100%

Oh yes they do @Flugelhorn and @What_time_is_it !

My wife would receive my whole pension entitlement for 10 years and 2/3 thereafter and that amount is what would have been my full pension disregarding the fact I took the maximum tax free lump sum.

@williamc10 you'll need to check each scheme as to what they pay.

Here you are mixing up/blending a guarantee period and spousal entitlement... 

If you were to die 11 years after retirement your wife would only get your full pension for 3 months and then move onto 2/3rds... you have a 10 year guarantee not a 100% spousal pension. 

My work is insurance so coming from it from the perspective of Annuities but there certainly are cases where pension schemes have dissolved their liability via a Buy-Out and the insurance bought for their pensioner had a 100% spousal benefit. 

In a single case they did a Buy-In with most staff having a 50% spouse benefit but a small number (assume the executive) with a 100% spouse benefit. When they moved to Buy-Out it turned out the scheme had excess funds and used that money to secure additional spouse benefits which meant for those few with a 100% benefit they actually became more than 100%


For most people by retirement their mortgage is paid off etc and so realistically their expenses do go down when their spouse dies and so a 100% spousal pension is often not required and increasingly so with more women having their own pensions since the death of the housewife. 

Tommyjw

I do actually know a DB Scheme with an executive category of 100% spouse benefit. A super special category with 5 people in, within a Scheme of around 300 or so .. gave me quite a shock when I saw it