Pension after death?

Bat125

Hi

My father died in 2021. 

He had a defined contribution pension and he died before retirement. 

We found an expression of wish form detailing us, his three sons, as nominated beneficiaries. Yet we are being told we are not entitled to anything as my dad made no contributions to it? Only the employer?

Thus seems really odd as he worked there for years. 

He did sue them for unfair dismissal and I remember at the time it was described as being frozen? Not sure what that means. 

Anyway. He was divorced and none of us are dependents. 

But surely we get something?

If not who gets it? The state? 

He tried to access it when he got ill. He was over 60 just. But they had no procedure for him unless he was terminally ill. He had heart failure and emphysema.  Hiw this is classed as not terminally ill is beyond me. But anyway… his pension advisor said not to transfer it or touch it in order to access it as it was such a good pension. Taken out in the 70s. 

I find it hard to believe it can just be taken from him/us. And it has been passed into so many different administrators and even the pension protection fund over the years. We feel his original agreement/contract terms have been changed or lost which also seems odd. 

Surely a pension of this type from the 70s would have had provisions or death benefits. In what circumstances wouldnt they?

any advice would be appreciated. Would we have any legal challenges to this?

NoMore

It sounds like a DB pension and as such the death benefits are defined by the scheme. For DB pensions its usually only spouse or dependant children (ie younger than 18) that would receive death benefits.

Note this is different to a a DC pension, which are much more common nowadays.

El_Torro

You're sure it is a DC pension, not DB?

Who made the contributions shouldn't matter, it should be his (or his inheritors' money) regardless of whether the contributions were employee or employer. 

It sounds a lot like this was a DB pension, which is why I ask the question. Death in service benefits might only apply if he died while employed.

molerat

I suspect you mean a defined benefit pension ?

If so the payouts are governed by the scheme rules.  If it has been through the PPF then much of the original scheme rules will not apply, the pension would likely have been saved from total collapse so many of the nice to have (expensive) add-ons would be removed. With no spouse or children in education (or relying on his support) there will be no payout.

Who gets it ? ........... the pension keeps the money, the state doesn't get it, that is how DB pensions can be fairly generous - it is those that die early helping to fund those that live to a ripe old age.

Brie

Are you sure it's a DC scheme?  Many in the 70s would have been defined benefit instead.  It was not uncommon for a DB scheme to be employer only contributions.

And unfortunately many of those also had a "widow's" entitlement that would be paid if he was still married (and possibly to the same person as when he left their employ).  The alternative that they would pay to "orphans" which would have been you and your siblings but likely only to the age of 25 at most and only if still in full time employment.  Presumably that excludes all of you.

Your one hope, in my opinion, would be to challenge the decision that they said he was not terminally ill.  That would need to be based on doctors reports rather than just him then or you now stating this.  There are normally something in most schemes that will do a fast track payout if someone has a very limited life expectancy.  This is the one situation where an IFA would be able to do a transfer out from one of these schemes so that there was immediate cash for the individual and possibly something left for the family to inherit. It appears the pension adviser didn't fully understand his situation.  Whether any of that can be wound back now I don't know.

I know it's been a couple of years but still, sorry for your loss.

Marcon

What's the pension scheme and who was the employer, please? Could you give your father's approximate dates of active membership (ie the dates on which he was building up benefits in the scheme while still employed by the employer in question)?

Silvertabby

You mention that the pension moved several times, including the 'pension protection fund'   Are you absolutely sure about that ?  The PPF is a 'lifeboat' arrangement for failed pension funds, with very specific rules.

Marcon

Brie said:

Your one hope, in my opinion, would be to challenge the decision that they said he was not terminally ill.  That would need to be based on doctors reports rather than just him then or you now stating this.  There are normally something in most schemes that will do a fast track payout if someone has a very limited life expectancy.  This is the one situation where an IFA would be able to do a transfer out from one of these schemes so that there was immediate cash for the individual and possibly something left for the family to inherit. It appears the pension adviser didn't fully understand his situation.  Whether any of that can be wound back now I don't know.

Being terminally ill isn't the same thing (in the eyes of HMRC) as being in 'serious ill health', which means the individual has medical evidence to confirm life expectancy is no more than 12 months. Not all schemes give the option of 'total commutation on grounds of serious ill health' (translation: a tax free lump sum payment representing the whole of the member's benefits in the scheme, but without impacting on any spouse/eligible children's pensions).
If that option doesn't exist, then the next thing to check is whether ill health early retirement is an option under the rules of a scheme.

Beware the oft-repeated idea that serious ill health is a 'good' reason for transferring out. If someone does that and dies within 2 years, HMRC has an unpleasant tendency to regard this as some sort of tax avoidance, and a thumping tax bill often follows. For that reason, transferring out is often the last thing a well-informed and competent adviser would recommend.

Albermarle

But surely we get something?
Not necessarily, you need to answer some of the questions in the other posts.

If not who gets it? The state? 
The state will not get any benefit. The money will stay in the pension fund or will get paid out, depending on the type of pension it is and the rules involved.

Sarahspangles

Bat125 said:

Hi

My father died in 2021. 

He had a defined contribution pension and he died before retirement. 

We found an expression of wish form detailing us, his three sons, as nominated beneficiaries. Yet we are being told we are not entitled to anything as my dad made no contributions to it? Only the employer?

Thus seems really odd as he worked there for years. 

He did sue them for unfair dismissal and I remember at the time it was described as being frozen? Not sure what that means. 

Anyway. He was divorced and none of us are dependents. 

But surely we get something?

If not who gets it? The state? 

He tried to access it when he got ill. He was over 60 just. But they had no procedure for him unless he was terminally ill. He had heart failure and emphysema.  Hiw this is classed as not terminally ill is beyond me. But anyway… his pension advisor said not to transfer it or touch it in order to access it as it was such a good pension. Taken out in the 70s. 

I find it hard to believe it can just be taken from him/us. And it has been passed into so many different administrators and even the pension protection fund over the years. We feel his original agreement/contract terms have been changed or lost which also seems odd. 

Surely a pension of this type from the 70s would have had provisions or death benefits. In what circumstances wouldnt they?

any advice would be appreciated. Would we have any legal challenges to this?

It sounds like a DB pension, if your dad had passed away while you were still minors it would have provided some benefits while you grew up. Instead or in addition to life insurance.

These pensions are a bit more like insurance, as there is no ‘pot’ with someone’s name on. If someone dies before drawing much pension it goes to the ones who live longest.

Bat125

I have found out some more info regarding my late father’s pension. 

When my father died it was being assessed by the pensions protection fund and subsequently was transferred to them. 

They say that because my father died during the assessment period they have no records passed onto them from the original provider? This can’t be right?

His pension can’t just disappear and they must have records of passed members? Anyways… this can be sorted hopefully. They are standing by that we as non dependents are not entitled to it even with an expression of wish form. 

But a solicitor has said my mother, his ex wife previously divorced, might have a claim to it? Can that be right? Even though they were divorced several years before he died? Apparently it’s classed as a matrimonial asset…

Not sure how likely this is but is it worth perusing?