If both my wife and I die (no kids), who gets my pension?

FrankRizzo

The sad news of Steve Wright made me start thinking what would happen in this scenario.

Thanks for everyone help and it make sense.

I still have a long time until retirement and I've always had a unhealthy thought that i will die a few weeks after i retire (i know im wired up wrong). If I thought the DB money could get passed on, then I would die happier , but since its not going to, would it make better sense to retire at the earlier age (55?), accept the pension penalties and reduction. I would obviously have to live a more frugal life and enjoy the simple things?

Marcon

FrankRizzo said:

The sad news of Steve Wright made me start thinking what would happen in this scenario.

Thanks for everyone help and it make sense.

I still have a long time until retirement and I've always had a unhealthy thought that i will die a few weeks after i retire (i know im wired up wrong). If I thought the DB money could get passed on, then I would die happier , but since its not going to, would it make better sense to retire at the earlier age (55?), accept the pension penalties and reduction. I would obviously have to live a more frugal life and enjoy the simple things?

Your DB pension is designed to give you, and your spouse if you have one at the time you die (and possibly children depending on their ages) a pension, so fretting about it 'getting passed on' makes little sense when it will have done its job by the time you die. Taking it early won't solve anything in that respect; the reduction factor is aimed at being 'cost neutral' so that by the time you die, you'll have received roughly the same pension you would have received had you retired at the scheme's normal retirement date.

Marcon

Silvertabby said:

Pat38493 said:

Albermarle said:

MoneySavingGerbil said:

It will differ for each pension. Most DB pensions include a 50% spousal pension. i.e. if you die your wife will get 50% of the pension and then when she dies the pension ceases.

A DC pension, as MallyGirl has already said, can be passed to whoever you like. If you die befoe the age of 75 then whoever it passes to can take it as a lump sum or as a regular pension, neither option will incur any tax. If you die after the age of 75 then they will pay tax on the income they receive from it.

I suppose the issue is if if you nominate your spouse as beneficiary of the DC pot, and then you both die in a car crash. If there are no dependents/children, I suppose the trustees will have to work out what to do for the best.

Probably they will try to locate any living family member no matter how distant, and even if they never met each other or knew each other existed.

Pension schemes won't do that.  Far too expensive!  In cases where there is no clear beneficiary - or when there are multiple cousins 4 times removed all screaming 'me, me me!' then the trustees will probably apply the rule of last resort and pay any money due to the executor.  

Quite - and if the money is paid to the personal representatives (ie executors or administrators, depending on whether or not the deceased left a will or died intestate) at the discretion of the trustees, it remains outside the estate for the purposes of IHT.

If there is a 'default' option that it will be paid to the personal representatives if there is no valid Expression of Wish form (ie the trustees have no discretion but to do that), it forms part of the estate for IHT purposes.

Albermarle

Taking it early won't solve anything in that respect; the reduction factor is aimed at being 'cost neutral' so that by the time you die, you'll have received roughly the same pension you would have received had you retired at the scheme's normal retirement date.

However if you did  take the pension early, then died before normal retirement date, or not long afterwards, you would be 'quids in' .

Marcon

Albermarle said:

Taking it early won't solve anything in that respect; the reduction factor is aimed at being 'cost neutral' so that by the time you die, you'll have received roughly the same pension you would have received had you retired at the scheme's normal retirement date.

However if you did  take the pension early, then died before normal retirement date, or not long afterwards, you would be 'quids in' .

But OP would be dead...how is that 'quids in' (but I get your point!).

Silvertabby

Marcon said:

Silvertabby said:

Pat38493 said:

Albermarle said:

MoneySavingGerbil said:

It will differ for each pension. Most DB pensions include a 50% spousal pension. i.e. if you die your wife will get 50% of the pension and then when she dies the pension ceases.

A DC pension, as MallyGirl has already said, can be passed to whoever you like. If you die befoe the age of 75 then whoever it passes to can take it as a lump sum or as a regular pension, neither option will incur any tax. If you die after the age of 75 then they will pay tax on the income they receive from it.

I suppose the issue is if if you nominate your spouse as beneficiary of the DC pot, and then you both die in a car crash. If there are no dependents/children, I suppose the trustees will have to work out what to do for the best.

Probably they will try to locate any living family member no matter how distant, and even if they never met each other or knew each other existed.

Pension schemes won't do that.  Far too expensive!  In cases where there is no clear beneficiary - or when there are multiple cousins 4 times removed all screaming 'me, me me!' then the trustees will probably apply the rule of last resort and pay any money due to the executor.  

Quite - and if the money is paid to the personal representatives (ie executors or administrators, depending on whether or not the deceased left a will or died intestate) at the discretion of the trustees, it remains outside the estate for the purposes of IHT.

If there is a 'default' option that it will be paid to the personal representatives if there is no valid Expression of Wish form (ie the trustees have no discretion but to do that), it forms part of the estate for IHT purposes.

Only known that to happen twice in 20 years.  Similar cases, in that the only known (or claimed) relatives were remote.  In each of those cases, the small death grants were paid to the person who had undertaken to arrange the funeral.  IHT wasn't a factor in either case. 

FrankRizzo

Marcon said:

FrankRizzo said:

The sad news of Steve Wright made me start thinking what would happen in this scenario.

Thanks for everyone help and it make sense.

I still have a long time until retirement and I've always had a unhealthy thought that i will die a few weeks after i retire (i know im wired up wrong). If I thought the DB money could get passed on, then I would die happier , but since its not going to, would it make better sense to retire at the earlier age (55?), accept the pension penalties and reduction. I would obviously have to live a more frugal life and enjoy the simple things?

Your DB pension is designed to give you, and your spouse if you have one at the time you die (and possibly children depending on their ages) a pension, so fretting about it 'getting passed on' makes little sense when it will have done its job by the time you die. Taking it early won't solve anything in that respect; the reduction factor is aimed at being 'cost neutral' so that by the time you die, you'll have received roughly the same pension you would have received had you retired at the scheme's normal retirement date.

Thanks - that makes sense.

If the reduction is factored as cost neutral, then would I not be better retiring at 55, rather than retiring at 65 - It would mean I would have less money for longer, but will have more time to do more life things?

I just don't see the sense in retiring at 65 with a decent chunk of money but may not be fully fit to enjoy it to the full.

Nebulous2

FrankRizzo said:

Marcon said:

FrankRizzo said:

The sad news of Steve Wright made me start thinking what would happen in this scenario.

Thanks for everyone help and it make sense.

I still have a long time until retirement and I've always had a unhealthy thought that i will die a few weeks after i retire (i know im wired up wrong). If I thought the DB money could get passed on, then I would die happier , but since its not going to, would it make better sense to retire at the earlier age (55?), accept the pension penalties and reduction. I would obviously have to live a more frugal life and enjoy the simple things?

Your DB pension is designed to give you, and your spouse if you have one at the time you die (and possibly children depending on their ages) a pension, so fretting about it 'getting passed on' makes little sense when it will have done its job by the time you die. Taking it early won't solve anything in that respect; the reduction factor is aimed at being 'cost neutral' so that by the time you die, you'll have received roughly the same pension you would have received had you retired at the scheme's normal retirement date.

Thanks - that makes sense.

If the reduction is factored as cost neutral, then would I not be better retiring at 55, rather than retiring at 65 - It would mean I would have less money for longer, but will have more time to do more life things?

I just don't see the sense in retiring at 65 with a decent chunk of money but may not be fully fit to enjoy it to the full.

That's what many people here do - retire early, with a plan to bridge the gap to state pension age, with savings / ISAs / Pensions. As long as you have enough money to meet your needs - you trade off more free time against more money. 


I stopped before 60 with a DB pension and took a part-time job. Have enough to enjoy life while working 1-2 days a week. 

Moonwolf

This is the NHS survivor's pension nomination form, it has a few details and is fairly typical for a DB scheme.  Only a dependent partner can receive the spouse's pension. https://cms.nhsbsa.nhs.uk/sites/default/files/2023-11/Nomination-PN1-20230811-(V10.1).pdf  Basically if your spouse or partner dies with you or before you die then no-one gets it.

If you die in service with no nominated partner then there are death benefits that go to your estate, this is probably more generous than some DB schemes. 

"If you are single without a scheme partner, widowed, divorced or have dissolved a civil partnership, the lump sum will be paid automatically to your estate unless you have nominated someone on the DB2 lump sum on death benefit nomination form."

This is in effect a life insurance linked to your pension, and you can actually nominate this lump sum to go to someone other than your partner.

saucer

Marcon said:

Albermarle said:

Taking it early won't solve anything in that respect; the reduction factor is aimed at being 'cost neutral' so that by the time you die, you'll have received roughly the same pension you would have received had you retired at the scheme's normal retirement date.

However if you did  take the pension early, then died before normal retirement date, or not long afterwards, you would be 'quids in' .

But OP would be dead...how is that 'quids in' (but I get your point!).

I think Albermarle knew exactly what he was saying