What happens?

Giovanni88

Hello.
I have a question, a simple one that I hope the answer too will end up being of no use at all.

So, i got thinking recently. Im 37, have a wife and 13 year old son, a mortgage, a dog and a cat. Very happy and can count ourselves lucky we are all in good health.

But I got thinking the other day about the what if's of life. And that led me to think 'what if something terrible suddenly happened to me and I died young?'

I have no life insurance and im the main earner in the household.

My first though was well ive got a private pension setup through my workplace which is defined contribution.

Which leads me to my question,

What happens to my pension if I was to die say next week, next year or anytime before ive ever touched my pension?

Would my wife who would not be able to pay mortgage etc be able to withdraw it  all and use it to pay things?

I do have her as my only beneficiary.

Thanks in advance. My pension is with standard life encase it matters.

dunstonh

My first though was well ive got a private pension setup through my workplace which is defined contribution.

One of the biggest mistakes many make is that they have the workplace pension and then mentally tick the box "pension: done" without knowing whether the pension itself is going to pay them enough when they retire.   Most workplace pensions are set at the minimum contribution and are insufficient.

Your comment suggests you are doing that. 
You need to asking yourself is it enough to meet my needs.

What happens to my pension if I was to die say next week, next year or anytime before ive ever touched my pension?

In most cases with modern pensions, your beneficiaries inherit the pension.

Would my wife who would not be able to pay mortgage etc be able to withdraw it  all and use it to pay things?

Yes she could.  However, it would then probably handicap retirement provision for her.    So, its not really a replacement for life assurance.

Marcon

Giovanni88 said:

Hello.
I have a question, a simple one that I hope the answer too will end up being of no use at all.

So, i got thinking recently. Im 37, have a wife and 13 year old son, a mortgage, a dog and a cat. Very happy and can count ourselves lucky we are all in good health.

But I got thinking the other day about the what if's of life. And that led me to think 'what if something terrible suddenly happened to me and I died young?'

I have no life insurance and im the main earner in the household.

My first though was well ive got a private pension setup through my workplace which is defined contribution.

Which leads me to my question,

What happens to my pension if I was to die say next week, next year or anytime before ive ever touched my pension?

Would my wife who would not be able to pay mortgage etc be able to withdraw it  all and use it to pay things?

I do have her as my only beneficiary.

Thanks in advance. My pension is with standard life encase it matters.

Things you might consider doing if you haven't thought about/done them:

1. read the details of your pension scheme and find out how much it is currently worth
2. check that your Expression of Wish form is up to date to facilitate a decision by the pension provider on who should get your pension if you die. it won't automatically go to your wife or son
3. make a will (ditto your wife), ensuring you make provision for a guardian for your son if his parents die in the same terrible road accident 
4. get life insurance (ditto your wife)
5. check if you have any sort of death in service benefit (aka life insurance) though your workplace
6. set up Lasting Powers of Attorney (ditto your wife): https://www.lastingpowerofattorney.service.gov.uk/home

Isthisforreal99

I would imagine at 37 that any survivor benefits paid to your wife won't be sufficient to pay the bills for long.

As above, find out exactly what would happen should the worst happen.

DE_612183

Also what sort of employment do you have?

My employer has a Death in Service aware of 2 x annual salary.

I also have Live Insurance in place for £250k

Same position as you - sole bread winner

Giovanni88

dunstonh said:

My first though was well ive got a private pension setup through my workplace which is defined contribution.

One of the biggest mistakes many make is that they have the workplace pension and then mentally tick the box "pension: done" without knowing whether the pension itself is going to pay them enough when they retire.   Most workplace pensions are set at the minimum contribution and are insufficient.

Your comment suggests you are doing that. 
You need to asking yourself is it enough to meet my needs.

What happens to my pension if I was to die say next week, next year or anytime before ive ever touched my pension?

In most cases with modern pensions, your beneficiaries inherit the pension.

Would my wife who would not be able to pay mortgage etc be able to withdraw it  all and use it to pay things?

Yes she could.  However, it would then probably handicap retirement provision for her.    So, its not really a replacement for life assurance.

Ok, thankyou very much.

I check my pension almost daily online via the app. I've upped my contributions to a around 15% of my weekly wages for the past few years and its doing well. I also moved away from the default fund a few years ago too and its payed off massively in terms of growth as most of my chosen funds were equity based, trackers, high volitility etc.

Not going to lie its taken a few hits here and there (cough cough donald) but even still im in double digits growth and im happy with how's its going.

But thankyou for answering my question. It gives me a little piece of mind.

Giovanni88

Isthisforreal99 said:

I would imagine at 37 that any survivor benefits paid to your wife won't be sufficient to pay the bills for long.

As above, find out exactly what would happen should the worst happen.

You're right it won't but its something. My wife works part time and has a smaller pension too. My pension would currently cover a 3rd of our outstanding mortgage as it stands.

Just thinking worse case tbh.

Giovanni88

DE_612183 said:

Also what sort of employment do you have?

My employer has a Death in Service aware of 2 x annual salary.

I also have Live Insurance in place for £250k

Same position as you - sole bread winner

I work full time + overtime for a small/medium sized engineering company.

No death in service
My wife work part time 

I need to learn about life insurance/assurance. I did try call once but they basically said they can't offer me (thd guy was so rude) as I have some medical condition that doesn't really affect me at all but heightens my chances of a cardiac event later in life. Im very fit and well, never had any trouble but I have high cholesterol that is hereditary and genetic.

DRS1

As previous posters have said you may well find you have some death in service insurance.  This used to be extremely common and relatively cheap for the employer.

It also used to be wrapped up in the pension scheme but with all the changes that have happened may now be a standalone scheme.  Well worth checking not just your pension booklet but also your employee's handbook (or where-ever they set out the terms and conditions of your employment).

But be aware it is death in service.  If you catch some nasty lingering disease which means they can let you go before you die it will not cover you.

On the pension the good news is if you die aged 37 your wife can inherit the pension tax free.  The bad news is it probably won't be worth much.  Again as mentioned above worth checking what it is worth, what you and the employer are paying in and especially whether there is an employer match for contributions so that if you paid more then so would the employer.

Edit sorry I was typing this before I saw your message saying no death in service benefit.  That seems unusual to me - isn't engineering potentially dangerous work?

Giovanni88

DRS1 said:

As previous posters have said you may well find you have some death in service insurance.  This used to be extremely common and relatively cheap for the employer.

It also used to be wrapped up in the pension scheme but with all the changes that have happened may now be a standalone scheme.  Well worth checking not just your pension booklet but also your employee's handbook (or where-ever they set out the terms and conditions of your employment).

But be aware it is death in service.  If you catch some nasty lingering disease which means they can let you go before you die it will not cover you.

On the pension the good news is if you die aged 37 your wife can inherit the pension tax free.  The bad news is it probably won't be worth much.  Again as mentioned above worth checking what it is worth, what you and the employer are paying in and especially whether there is an employer match for contributions so that if you paid more then so would the employer.

Thankyou I will check the insurance bit but u don't believe so.
Employer only pays minimum (3%) i think which is not great.
What's worse is my overtime takes me from basic rate earner to comfortable into the 40% so u put more into my pension (circa 15%)  to try avoid some tax.

I might open an isa although I don't have much laying around to put into it ha!

Thanks again 

DRS1

Giovanni88 said:

DRS1 said:

As previous posters have said you may well find you have some death in service insurance.  This used to be extremely common and relatively cheap for the employer.

It also used to be wrapped up in the pension scheme but with all the changes that have happened may now be a standalone scheme.  Well worth checking not just your pension booklet but also your employee's handbook (or where-ever they set out the terms and conditions of your employment).

But be aware it is death in service.  If you catch some nasty lingering disease which means they can let you go before you die it will not cover you.

On the pension the good news is if you die aged 37 your wife can inherit the pension tax free.  The bad news is it probably won't be worth much.  Again as mentioned above worth checking what it is worth, what you and the employer are paying in and especially whether there is an employer match for contributions so that if you paid more then so would the employer.

Thankyou I will check the insurance bit but u don't believe so.
Employer only pays minimum (3%) i think which is not great.
What's worse is my overtime takes me from basic rate earner to comfortable into the 40% so u put more into my pension (circa 15%)  to try avoid some tax.

I might open an isa although I don't have much laying around to put into it ha!

Thanks again 

Pension contributions to get you down to basic rate is very sensible.

Even if you were wholly in basic rate people on here will tell you pension contributions beat ISA contributions (by 6.25% I believe).

On the other hand ISAs can be accessed before you are 55 (or 57) while a pension can't (unless you die).  If you have any savings they would be best put into ISAs even if there is no new money going in there.

It is a shame about the death in service position - your personal medical status would not matter for a group scheme.

Still cholesterol can be controlled with pills and you would think they would take that into account.  It is a standard question for enhanced annuities but I don't think it gives you that much more so should not really cost that much for the life cover.

If you are going to start worrying about things maybe have a read of this
Income protection insurance: is it worth it? - Which?
Of course that falls in the category of something you may never need whereas life cover ....