Death in service benefit and the effects on UC

kaMelo

silvercar said:

kaMelo said:

I would assume the power to mount a legal challenge would be restricted to an interested party, in this case the husband or his representative. I doubt the DWP could challenge anything.
Whether or not the husband would mount a legal challenge has no bearing in any decision the trustees make and any decision they do make needs to be done so under the assumption it may be challenged. So they need to able to defend their decison in court. It's also important to understand that although it is possible for trustees to exercise their discretion not to follow their members expression of wishes, it happens very rarely.

In the OP's case the trustees should have taken into account the family circumstances and decided to follow their members wishes. One way to force the trustees to make a different decision would be for the husband to have rejected any pension benefits. The trustees may then choose to do as hoped, and pay the pension benefits directly to their members children, but they could also make a different decision such as paying it into their members estate to be distributed according to their will. Or they could choose something else, either way it's a risk as there is no way of knowing what decison they would make and the husband cannot direct them to make a certain decision.

It’s a no-lose risk. Either they insist on paying to the husband, in which case the situation would be as if the request hadn’t been made, or they direct to the kids as requested.

It's not a no lose risk at all, you cannot direct the trustees to do anything so it's not an either or situation as the trustees could decide to do something else.
The reason @Silvertabby gives is an incredibly good reason why the husband shouldn't do so. Assuming the husband is of a similar age to his wife, that reason alone makes my suggestion for the husband to reject any pension benefits is a terrible suggestion.

Silvertabby

kaMelo said:

silvercar said:

kaMelo said:

I would assume the power to mount a legal challenge would be restricted to an interested party, in this case the husband or his representative. I doubt the DWP could challenge anything.
Whether or not the husband would mount a legal challenge has no bearing in any decision the trustees make and any decision they do make needs to be done so under the assumption it may be challenged. So they need to able to defend their decison in court. It's also important to understand that although it is possible for trustees to exercise their discretion not to follow their members expression of wishes, it happens very rarely.

In the OP's case the trustees should have taken into account the family circumstances and decided to follow their members wishes. One way to force the trustees to make a different decision would be for the husband to have rejected any pension benefits. The trustees may then choose to do as hoped, and pay the pension benefits directly to their members children, but they could also make a different decision such as paying it into their members estate to be distributed according to their will. Or they could choose something else, either way it's a risk as there is no way of knowing what decison they would make and the husband cannot direct them to make a certain decision.

It’s a no-lose risk. Either they insist on paying to the husband, in which case the situation would be as if the request hadn’t been made, or they direct to the kids as requested.

It's not a no lose risk at all, you cannot direct the trustees to do anything so it's not an either or situation as the trustees could decide to do something else.
The reason @Silvertabby gives is an incredibly good reason why the husband shouldn't do so. Assuming the husband is of a similar age to his wife, that reason alone makes my suggestion for the husband to reject any pension benefits is a terrible suggestion.

This idea may have worked with a DC scheme and a one-off payment, but not a public sector DB scheme with survivor's pension benefits on top of the lump sum death grant 

HillStreetBlues

Silvertabby said:

But rejecting the pension wouldn't just be in respect of the lump sum -  the husband would then also lose his widower's pension for life.  This couldn't be re-directed to the children, as they would have their own pension entitlements.

Trying to lean a bit here.
I thought the spouse would inherit the monthly pension directly so is septate from the lump sum paid into the trust.

Silvertabby

HillStreetBlues said:

Silvertabby said:

But rejecting the pension wouldn't just be in respect of the lump sum -  the husband would then also lose his widower's pension for life.  This couldn't be re-directed to the children, as they would have their own pension entitlements.

Trying to lean a bit here.
I thought the spouse would inherit the monthly pension directly so is septate from the lump sum paid into the trust.

The original suggestion was that the husband should reject all pension benefits.

HillStreetBlues

Silvertabby said:

HillStreetBlues said:

Silvertabby said:

But rejecting the pension wouldn't just be in respect of the lump sum -  the husband would then also lose his widower's pension for life.  This couldn't be re-directed to the children, as they would have their own pension entitlements.

Trying to lean a bit here.
I thought the spouse would inherit the monthly pension directly so is septate from the lump sum paid into the trust.

The original suggestion was that the husband should reject all pension benefits.

The suggestion was just about the money paid into trust as per silvercar  post that kaMelo  replied to. The monthly pension was never referred to.

kaMelo

HillStreetBlues said:

Silvertabby said:

HillStreetBlues said:

Silvertabby said:

But rejecting the pension wouldn't just be in respect of the lump sum -  the husband would then also lose his widower's pension for life.  This couldn't be re-directed to the children, as they would have their own pension entitlements.

Trying to lean a bit here.
I thought the spouse would inherit the monthly pension directly so is septate from the lump sum paid into the trust.

The original suggestion was that the husband should reject all pension benefits.

The suggestion was just about the money paid into trust as per silvercar  post that kaMelo  replied to. The monthly pension was never referred to.

It's complicated because death in service benefit payments can exist under the same roof as the pension administrator or they can be independent of an occupational pension scheme where death in service benefits are provided through an insurance policy. (The differences were highlighted with the proposed IHT changes to pensions and what type of payment would and what would not be subject to IHT)
.
The NHS pension and death in service benefits are operated under the same roof and I suspect all public sector organisations are the same. in that being member of the pension scheme also gives you death in service benefits but if a member opts out of the pension scheme they also opt out of any death in service benefits too. You can't have one without the other. 

In the OP's case with the husband being named as beneficiary for both death in service payment and spouse pension, as they are linked together I don't think it's possible to only reject part of the pension benefits, you can only reject the pension benefits as a whole.

HillStreetBlues

kaMelo said:

In the OP's case with the husband being named as beneficiary for both death in service payment and spouse pension, as they are linked together I don't think it's possible to only reject part of the pension benefits, you can only reject the pension benefits as a whole.

Legally OP isn't rejecting the lump sum, he can ask the Trustees not to pay it to him but they have the discretion, that's why if the OP wasn't paid the lump sum it's not DoC.

I think the pension must be able to be split as if not if the OP takes the monthly payments then the lump sum has to be paid to him. If that was the case the lump sum would not be in a Trust. It's why a Statement of Wishes isn't legally binding, as you can't bind a Trust.

The Trustees duty has to be to the family, not to the company or DWP.  If the OP explains that the wife did want to children to have the lump sum, and the SoW had been superseded and that the family would best better of financially I think a Trustee would be failing in their duty not to consider what is the best result for the family.