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

FrankRizzo

Nebulous2 said:

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. 

Thanks. During the years where you were not paying into the DB pension - does the pension continue to increase with the cost of living?

MallyGirl

there will be scheme rules about how it increases - RPI or CPI or something else, maybe capped at a certain percentage

DullGreyGuy

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.

Depends on when you die... its cost neutral if you are to die at the average age for your cohort, if you die early then you are better off taking the pension early, if you die later you are better off with the larger pension. Unless you have a reason to know your life is going to be longer or shorter than your peers it's a gamble. 

Hoenir

MallyGirl said:

there will be scheme rules about how it increases - RPI or CPI or something else, maybe capped at a certain percentage

Often an upper ceiling of 5%. 

Bostonerimus1

OP, if you don't know the answer then we certainly don't. You should make sure you have designated your beneficiaries and understand any death benefit of your DB plan. When you die your assets will be distributed according to your designated beneficiaries and your will and the probate process.

DullGreyGuy

Hoenir said:

MallyGirl said:

there will be scheme rules about how it increases - RPI or CPI or something else, maybe capped at a certain percentage

Often an upper ceiling of 5%. 

Schemes can have ceilings and floors but some are uncapped and in theory some allow negative percentages as the UK had in 2009. 

Never taken a census of schemes to say its "often" 5% but have seen plenty with higher caps and some with lower. One had a cap of 3% and a floor or 2.5% so it almost could have been a flat rate escalation. 

Nebulous2

FrankRizzo said:

Nebulous2 said:

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. 

Thanks. During the years where you were not paying into the DB pension - does the pension continue to increase with the cost of living?

I took my DB pension, with the reduction for taking it early. 

Hoenir

DullGreyGuy said:

Hoenir said:

MallyGirl said:

there will be scheme rules about how it increases - RPI or CPI or something else, maybe capped at a certain percentage

Often an upper ceiling of 5%. 

Schemes can have ceilings and floors but some are uncapped and in theory some allow negative percentages as the UK had in 2009. 

Never taken a census of schemes to say its "often" 5% but have seen plenty with higher caps and some with lower. One had a cap of 3% and a floor or 2.5% so it almost could have been a flat rate escalation. 

A throw back to the high inflation era some decades ago. DB schemes introduced the ceilings to protect themselves against a reoccurence. . 

Albermarle

Bostonerimus1 said:

OP, if you don't know the answer then we certainly don't. You should make sure you have designated your beneficiaries and understand any death benefit of your DB plan. When you die your assets will be distributed according to your designated beneficiaries and your will and the probate process.

With a DB scheme, the scheme rules usually have little discretion about who they pay out to on your death.
Spouse first, then dependent children. If neither of those exist there is no payout.
With DC schemes you can nominate beneficiaries.

Moonwolf

I thought they were set here?  https://commonslibrary.parliament.uk/research-briefings/sn05656/#:~:text=Increases to pensions from defined benefit schemes&text=Pensions in payment must be,for rights accrued since then.