What happens to pension when someone dies

longwalks1

Following a passing over Christmas of a close friend, I’m currently helping his 2 sons (27 and 29) complete the IHT400 and probate paperwork.
the deceased had 2 pensions, one recent one started approx 7 years ago and the other ran for over 20 years at a job he started in approx 1991. 

I know DB pensions usually pass 50% value to the spouse, but what will happen to the 2 x pensions (assuming the older one isn’t DB, finding out this week).  

If the pensions pass down to the beneficiaries (in this case, his 2 sons), does the money go into the estate to be divided up, or does it stay as a pension and they can’t access it until their retirement?
there wasn’t a will so will be applying for letters of administration for his sons. 

elkiedee

Did your friend work in the public or private sector? Public sector pensions and older pensions are more likely to have been defined benefit. My deferred LGPS pension also includes a death grant which is payable as a lump sum to nominated beneficiaries if someone dies before taking the pension, and members can nominate children rather than a spouse or partner, but I don't think that our kids would get anything else from the pension (my partner is still working in local government).

Savvy_Sue

It's going to depend. The lads will need to contact the pension providers and inform of the death. Say that there's no will, and that they are the two beneficiaries under intestacy. Copy of death certificate probably helpful. 

Be aware that if there's been any overpayment, there'll be a demand for repayment, and that this has to be done before any one off or ongoing benefit is paid to the survivors.

Hoenir

Children are normally regarded as beneficiaries of DB schemes if they are financially dependent i.e. still in full time education. Once financially independent adults then there's provision in the scheme to benefit them. 

RAS

Some LGPS schemes pay out a lump sum to nominees if the beneficiary survives less than 10 years. Basically, they expect 10 years survival and if the pensioner survives less, they pay out the difference. Sort of death grant after pension age.