USS - best options when a terminal diagnosis is received?

Tomatillo

Unfortunately we are facing similar issues so happy to discuss by DM if helpful. I have found their ill health retirement people to be very helpful. What is best to do depends in part on what they want to achieve, especially whether they want to provide for family members or not. 

Tarama

GDB2222 said:

Tarama said:

GDB2222 said:

If your friend is still in employment, the death in service benefits may be more generous than any other option. In other words, doing nothing may be the best option. 

In any case, you have not given much information. Do they have dependants? Children? Spouse? Roughly how old is your friend?

Hello 

thank you for your reply.  My friend is still in employment and I am aware of the life cover.  I have given few details because they are not really relevant to what I need to know and this is all so new, difficult and sensitive .  I just need the available options and to help my friend work it all out from this.

Thank you for taking time to reply.  

https://www.uss.co.uk/for-members/life-events/what-happens-when-you-die

One of the key questions is whether your friend wants to maximise the benefits that they receive during their lifetime, or whether they want to maximise the benefits paid to their dependants. Hopefully they can work out their options from the website. 

There are some practical issues like making sure that they update their beneficiary nomination. 

I’m a member of USS but have not had to contact them for years, so I don’t know how helpful they would be if you ring them to discuss this. They probably won’t discuss it on a general basis, so you might well need a letter of authority from the member. 

Hello GDB2222 

thanks - I will advise my friend about this but it is such a difficult time and hard to broach.  I know when I retired, USS were very helfpul.

Tarama

Tomatillo said:

Unfortunately we are facing similar issues so happy to discuss by DM if helpful. I have found their ill health retirement people to be very helpful. What is best to do depends in part on what they want to achieve, especially whether they want to provide for family members or not. 

Thank you Tomatillo

this is really very kind of you.  I have given my friend the information and let her know about your generous offer.  I will get back to you when my friend has some clarity about the situation.  It is changing daily and all so very difficult.

GDB2222

Years ago, I was consulted about a pension issue. The husband had a terminal prognosis, and he came to see me with his wife. He was determined to put his pension into payment, as he wanted to get everything sorted out before he died, so as not to leave a problem for his wife. I persuaded him that it was far better for his wife if he left the pension untouched, so that she could get the death benefit.

During the meeting it became apparent that the wife knew all that already, and it was she who had instigated the consultation. It was just that she needed someone else to explain the matter to her husband. 

Silvertabby

GDB2222 said:

Years ago, I was consulted about a pension issue. The husband had a terminal prognosis, and he came to see me with his wife. He was determined to put his pension into payment, as he wanted to get everything sorted out before he died, so as not to leave a problem for his wife. I persuaded him that it was far better for his wife if he left the pension untouched, so that she could get the death benefit.

During the meeting it became apparent that the wife knew all that already, and it was she who had instigated the consultation. It was just that she needed someone else to explain the matter to her husband. 

It depends on the pension scheme, the prognosis, and age.  In the case of a 40 year old LGPS pensioner with 12 months to live, by far the best (financial) decision was to start drawing the Tier 1 pension, taking the maximum commuted lump sum.  Then, on death, the survivor(s)  received a further tax free lump sum of 10 X pension minus pension already taken (the pension guarantee).  The sum of the two tax free lump sums far exceeded the 3 X salary death in service payment.

Of course, every scheme is different - and very few have a 10 year guarantee period (for post 2008 leavers).  Just please be aware that the death in service may not always be the one to go for.

Tomatillo

GDB2222 said:

Years ago, I was consulted about a pension issue. The husband had a terminal prognosis, and he came to see me with his wife. He was determined to put his pension into payment, as he wanted to get everything sorted out before he died, so as not to leave a problem for his wife. I persuaded him that it was far better for his wife if he left the pension untouched, so that she could get the death benefit.

During the meeting it became apparent that the wife knew all that already, and it was she who had instigated the consultation. It was just that she needed someone else to explain the matter to her husband. 

It might depend on whether they could get full commutation of the pension through serious ill-health (i.e. less than 12 months to live). That may be substantially higher than the death benefit, although it does come with the 'risk' of unexpectedly having a better outcome than predicted. The other issue is whether the person can still work/be on sick leave. If that is coming to and end there may be no option but to take one of the ill-health pension routes. 

GDB2222

I don't want to get side-tracked into discussing advice I gave 25 or 30 years ago, concerning a completely different pension arrangement. I mentioned it because of the emotions involved, and the person with the diagnosis being concerned to wrap up their affairs so as not to leave loose ends. 

kermchem

Those who want to give the OP and their friend some guidance (not advice!) based on the rules of USS rather than some othe random scheme should go to www.uss.co.uk and scroll to the bottom of the page where there is the opportunity to download a guide for IFAs as a pdf - actually it is a very readable guide about USS for anyone financially literate.

Tarama

GDB2222 said:

I don't want to get side-tracked into discussing advice I gave 25 or 30 years ago, concerning a completely different pension arrangement. I mentioned it because of the emotions involved, and the person with the diagnosis being concerned to wrap up their affairs so as not to leave loose ends. 

Yes this is the type of situation my friend is in.  It is a recent diagnosis and because the prognosis is poor, and the physical effects are significant, there are many emotions involved.  Never mind being able to discuss the situation with the family and gaining any sort of acceptance of the diagnosis.  This is all making the situation very difficult to navigate.

Thank you for all your responses, which give other viewpoints.    

Cornish_mum

Hello, I am also USS and have looked at a similar situation for myself.

As others have said DinS, spouse and dependent children pension can be considerable and should be carefully weighed up against early pension. 

In addition to all the advice above your friend should consider speaking to UCU if a member.

Please also consider their employers sick and medical leave entitlement policy. In this situation taking a mix of annual and medical leave (typically half days for medical appointments are not counted as sick leave) for as long as possible prior to triggering sick leave, & then a period of unpaid leave (possibly with the employee paying voluntary USS contributions) may be beneficial, if the employer is willing to facilitate.  

Their diganosis is also relevant to consider, in case it classes them as disabled in terms of employment law, which can be helpful when interacting with the HEI HR team.