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  • FIRST POST
    • westport
    • By westport 29th Jan 18, 2:46 PM
    • 7Posts
    • 0Thanks
    westport
    Beware State Pension shock when partner dies
    • #1
    • 29th Jan 18, 2:46 PM
    Beware State Pension shock when partner dies 29th Jan 18 at 2:46 PM
    I phoned the State Pension line to find out what happens if your partner dies under the new State Pension scheme, if you have both qualified for the full amount. I could not believe what I was hearing when I was told that you will get nothing from your partners pension, unless you have made any additional contributions before April 2016, which I am sure the majority of us will not have done, as it would have just been taken directly from your employer. So when a partner passes away you will still have the same household bills, but will only get half the income. This needs to be publicised or a lot of people are in for a big shock.
Page 5
    • cjdavies
    • By cjdavies 4th Feb 18, 10:04 AM
    • 3,294 Posts
    • 3,508 Thanks
    cjdavies
    So when a partner passes away you will still have the same household bills, but will only get half the income.
    Originally posted by westport
    I got a mortgage on my home 10 years ago as a single person and still today living as a single person, the bills are not that bad alone.

    You get 25% off council tax single person.
    • antonic
    • By antonic 4th Feb 18, 1:14 PM
    • 1,796 Posts
    • 2,626 Thanks
    antonic
    Thanks.

    I appreciate your input !.

    It has given me food for thought !.

    Thanks. Strictly speaking, years and months no longer matter however - your Classic reckonable service isn't getting any bigger, and your Alpha benefits are simply determined by your pensionable pay during the year, not the year itself.



    45 was the Classic cap. As you're now in Alpha, there is no cap. (Nuvos was/is the same.) What going at 67 will ensure is no actuarial reduction on your Alpha benefits, assuming your SPA doesn't rise in between (which I think you can be reasonably confident of).



    Think about the effect on your pension however - between 60 and 67, the value of your Classic benefits will fall because you are past their NPA, you are unable to actually take them, and there is no actuarial increase to reflect the fact. Increasing your pay above inflation would counteract that, since it would increase the value of your Classic service when you do finally take the pension.
    Originally posted by hyubh
    LBM Sept 2005 spoke to Payplan - brilliant !
    Dec 2005 debt £21.959.64 + HBOS Int £1769.32
    June 2013 debt £0.00
    DF status confirmed by email 10/07/13
    DFW Long Hauler 297
    • rdpeat
    • By rdpeat 6th Feb 18, 8:26 AM
    • 14 Posts
    • 7 Thanks
    rdpeat
    A similar thing applies to deferred state pensions. You could have forgone e.g. 6k of pension for each year of deferment. If your spouse predeceases you, in the worst case scenario that sum also falls back into the system.
    Anyone who has deferred taking their state pension and is living as a couple should read the deferment rules carefully and consider what happens to their deferred state pension when they die, with particular respect to the order of death, whether they are married or in a civil partnership or just living together and whether or not they have officially 'claimed' (ended the deferment) at the time of their death. There are 2 sets of rules depending on your pensionable age. Complex because life and governments are varied and complex.
    I never thought much about state pension until I became of pensionable age. I'm probably in the overwhelming majority in this respect. Not a good idea - ignorance is not bliss when it comes to your pension.
    • relishy57
    • By relishy57 6th Feb 18, 9:34 AM
    • 21 Posts
    • 4 Thanks
    relishy57
    No guarantees, unfortunately the worst can happen and all the spreadsheets in the world do not protect you unless you have planned for “what if one of us goes, much sooner”.
    My husband passed away 3 months before his 66 th birthday so didn’t claim his SP for even a full year.
    I find bills etc are manageable especially now children are not living at home. I knew I would be affected by the changes in the State Pension Age, and always saw myself as independent from his money not a dependent as my mother has been on my father working to provide for her.
    The internet is a powerful tool within reason for finding out information. I am however continually shocked at friends/acquaintances in 50s, 60s who have no idea of State Pension forecasts etc and what their retirement age is.
    • OneInTheHat
    • By OneInTheHat 6th Feb 18, 10:11 AM
    • 38 Posts
    • 14 Thanks
    OneInTheHat
    I got a mortgage on my home 10 years ago as a single person and still today living as a single person, the bills are not that bad alone.

    You get 25% off council tax single person.
    Originally posted by cjdavies
    and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.
    • GibbsRule No3
    • By GibbsRule No3 6th Feb 18, 10:52 AM
    • 657 Posts
    • 382 Thanks
    GibbsRule No3
    and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.
    Originally posted by OneInTheHat
    Does food really come down on your own? I have always lived on my own, so get the 25% off Council Tax but pay full rent, electric for cooking, heating for a one bedroom place etc. TV licence. Phone/Internet. On one income/Pension. At least it is not coming as a shock to me though. Also don’t forget the holiday supplements if you go on holiday, not forgetting paying more for the room but it probably being worse than the double you had before.
    Paddle No 21
    • relishy57
    • By relishy57 6th Feb 18, 12:09 PM
    • 21 Posts
    • 4 Thanks
    relishy57
    Main food saving for me is less meat to buy as I don’t eat lamb, steak etc. It’s also a bit of an unlooked for silver lining in that some days I will have something light to suit me without having to cook a full meal.
    Ahh the dreaded single supplements on holidays! I have been on 2 cooking holidays in Italy which were very enjoyable and had no single supplements but were expensive to begin with.
    I think my savings are going to take a nose dive for a lovely reason from late April onwards as my first grandchild is due then.
    • kidmugsy
    • By kidmugsy 6th Feb 18, 12:15 PM
    • 10,527 Posts
    • 7,212 Thanks
    kidmugsy
    and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.
    Originally posted by OneInTheHat
    Get a water meter installed.
    Free the dunston one next time too.
    • kidmugsy
    • By kidmugsy 6th Feb 18, 12:19 PM
    • 10,527 Posts
    • 7,212 Thanks
    kidmugsy
    pay full rent, electric for cooking, heating for a one bedroom place etc. TV licence. Phone/Internet. On one income/Pension.
    Originally posted by GibbsRule No3
    If I were widowed I'd probably do without the TV licence. Come to that, I'd presumably sell the house and find something smaller with no stairs. More easily said than done, I imagine.
    Free the dunston one next time too.
    • sammyjammy
    • By sammyjammy 6th Feb 18, 12:32 PM
    • 4,304 Posts
    • 4,657 Thanks
    sammyjammy
    Auto enrolment sounds good, but if people & employers only pay in the minimum, even if they start at 18 it will not be anywhere near enough to fund a decent retirement.
    Originally posted by badmemory
    It's got to be better than the nothing many people have now (other than SP and Pension credit)? I think that the contribution level should be gradually increased. You can't suddenly introduce it with massive contribution rates.
    "You've been reading SOS when it's just your clock reading 5:05 "
    • sammyjammy
    • By sammyjammy 6th Feb 18, 12:45 PM
    • 4,304 Posts
    • 4,657 Thanks
    sammyjammy

    Think about the effect on your pension however - between 60 and 67, the value of your Classic benefits will fall because you are past their NPA, you are unable to actually take them, and there is no actuarial increase to reflect the fact. Increasing your pay above inflation would counteract that, since it would increase the value of your Classic service when you do finally take the pension.
    Originally posted by hyubh
    Interesting. I consider myself quite knowledgeable on my CS Pension and I wasn't aware of this. I'll have to read up on it.


    What bugs me is that if you take your Classic pension at 60 and want to continue to work you can only work part-time. This rule should not apply in my opinion due to the fact that it's two different pensions.


    We either have to take our Classic pension at 60 and therefore reduce our level of Alpha pension or Leave the Classic pension to sit tight and wait 7 years with no benefit for not taking it in that time. Seems right.


    I'm not really complaining though, I know how lucky I am.
    "You've been reading SOS when it's just your clock reading 5:05 "
    • badmemory
    • By badmemory 6th Feb 18, 1:07 PM
    • 1,612 Posts
    • 2,117 Thanks
    badmemory
    It's got to be better than the nothing many people have now (other than SP and Pension credit)? I think that the contribution level should be gradually increased. You can't suddenly introduce it with massive contribution rates.
    Originally posted by sammyjammy
    Totally agree anything is better than nothing. But the current max is only 8% combined & unless people are told that it will not be enough millions won't realise until they are retiring.

    I believe they are bringing the starting age down to 18. That will mean one year at 7% below what is normally suggested on here, followed by one year at 4% below & the rest of their lives at 1% below. That, of course, would be if it was paid on their full salary & from the odd things I've read the lower the salary the more likely there is a bottom limit to contributions.

    If they don't start until 21 then those figures are 9.5%, 6.5% & 3.5%. For those who never have a job for long then 7% for life.

    Perhaps they should make it a legal requirement for everyone over 16 to read MSE at least once a month. (Apply tongue in cheek smilie here!)
    • DairyQueen
    • By DairyQueen 6th Feb 18, 3:49 PM
    • 244 Posts
    • 400 Thanks
    DairyQueen
    and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.
    Originally posted by OneInTheHat
    Definitely agree that it's much tougher for someone single to save/plan for a decent retirement.

    My comments aren't directed at the minority: the highly paid, women with no children (gender will be a big legacy pension disadvantage for some years yet), those with generous DB benefits, etc. This is not the norm for most.

    I have been running homes as a single, and as one of a couple, in the last decade. Mortgage paid off in both scenarios. Same house. The bills increased only marginally when OH moved in but the household income increased dramatically, and so did the pension provision. There has been a significant increase in food costs (around 30%), a little extra on the water bill, and the council tax discount disappeared. Marginal cost of extra person pretty small on total non-discretionary spends.

    The increase in discretionary spending (entertainment, eating out, holidays, gifts) has been much higher (more than doubled - says a lot about OH's spending habits).

    I don't think you can compare someone who enters retirement single to those who do so as a couple, and then become single (widowed/divorced). The former will have planned their finances based only on their own resources, the latter will almost certainly have viewed all pensions/assets as one pot regardless of the name on the tag. Singles are likely to have less household income from the get-go whilst couples need to plan for (possibly) a big reduction in income on the first death.

    The pension rules have only recently changed. The legacy of many preceding decades will take a few more decades before the financial/cultural transition is complete. Most people have known for eons about things like equalisation of pension age. A great many still don't know the small print of changes now implemented that weren't even proposed a decade ago, and many are still making assumptions based on old rules. I was told (for example) in 2006 (by DWP) not to bother making up missing NI years as I could claim against my ex's NI record. That's no longer the case and, luckily for me, I checked the small print of the new rules very carefully.

    The bottom line is that singles/widows are the poorest retired demographic (check-out the latest Age UK report). The poorest of all are single/widowed women. This is the legacy of cultural norms and pension rules that prevailed for much of the 20th century.

    There is still a widespread lack of knowledge about the new state pension and new pension rules. I know plenty who have yet to check their SP forecast despite being within two years of retirement. Plenty more don't know that the state widow/er's pension is now binned. The mainstream media has marginalised the important detail. Possibly it's too complicated to explain in their usual soundbites and headlines.

    I see lots of threads discussing retirement finances. Most seem to be in couples and they base their 'number' on lifelong availability of both parties' total guaranteed pension income. It's hardly mentioned that the new SP will either disappear or significantly reduce on death, or that any DB pension will reduce by 50%.

    Often one of a couple has a much bigger pension than the other but most people don't have massive individual pension pots. The average income for a retired couple is now in the region of £25k. For home-owner couples with no mortgage that sounds pretty reasonable. But what it it consists of two SPs, plus one person's £7000 DB and a £2k drawdown (other person's name)?

    First death (if higher pension earner): household income reduces to approx. £13.5k.
    First death (if lower pension earner)): household income reduces to approx. £17k (assuming survivor inherits balance of DC/SIPP and drawdown at the same rate is sustainable).

    That looks like a pretty drastic drop in household income to me, especially for the lower income pensioner.

    A single will generally enter retirement with different (lower?) expectations and won't suffer any income shocks like this. However, a single also won't enjoy the benefit of the higher living standard supplied by two pension incomes before the first of a couple dies.

    Couples need to prepare for a drop in household income on the first death regardless of how big their pension pots, and the media should spend a bit more time highlighting the issues for retired singles whether or not they entered retirement with that status.

    NB: Married, no kids, nearing retirement, reasonable pension provision, full NI record, mortgage paid, no debts, OH with generous pension. I'm in the minority so could others like me please refrain from the 'doesn't apply to me so doesn't apply to the majority' mantra before checking the facts. Inconvenient truths are no less truths. Singles do have higher costs per head. Singles do have less pension income per head. People do experience an immediate drop in income when widowed in retirement. Women do earn substantially less than men over their lifetimes, and have substantially less pension provision as a result. Lower earners and part-timers were denied access to the same pensions as high earners and full-time workers. Private sector workers are now denied the same access to pension benefits as public sector. Equalising pension laws and rules will not change the legacy of decades for many, many years and anyone blaming the victims of past/present discrimination for the consequences of that discrimination says much about the selfishness, intolerance and ignorance of some individuals.

    End of over-long post and over-long rant (apologies to the forum and, especially, to the OP for hijacking the thread).
    • cloud_dog
    • By cloud_dog 6th Feb 18, 3:55 PM
    • 3,687 Posts
    • 2,186 Thanks
    cloud_dog
    Excellent post DQ.

    So many of the points you raise are why I am reviewing my/our own pension position in light of the overall situation (with / without me).
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • OldBeanz
    • By OldBeanz 6th Feb 18, 4:16 PM
    • 735 Posts
    • 566 Thanks
    OldBeanz
    One thing missed is that men tend to follow their wives into the grave while widows carry on as before.
    In addition, forty years ago some women chose to pay a smaller stamp.
    • woolly_wombat
    • By woolly_wombat 6th Feb 18, 4:32 PM
    • 524 Posts
    • 333 Thanks
    woolly_wombat

    The pension rules have only recently changed. The legacy of many preceding decades will take a few more decades before the financial/cultural transition is complete. Most people have known for eons about things like equalisation of pension age. A great many still don't know the small print of changes now implemented that weren't even proposed a decade ago, and many are still making assumptions based on old rules. I was told (for example) in 2006 (by DWP) not to bother making up missing NI years as I could claim against my ex's NI record. That's no longer the case and, luckily for me, I checked the small print of the new rules very carefully.

    The bottom line is that singles/widows are the poorest retired demographic (check-out the latest Age UK report). The poorest of all are single/widowed women. This is the legacy of cultural norms and pension rules that prevailed for much of the 20th century.

    There is still a widespread lack of knowledge about the new state pension and new pension rules. I know plenty who have yet to check their SP forecast despite being within two years of retirement. Plenty more don't know that the state widow/er's pension is now binned. The mainstream media has marginalised the important detail. Possibly it's too complicated to explain in their usual soundbites and headlines.

    I see lots of threads discussing retirement finances. Most seem to be in couples and they base their 'number' on lifelong availability of both parties' total guaranteed pension income. It's hardly mentioned that the new SP will either disappear or significantly reduce on death, or that any DB pension will reduce by 50%.
    Originally posted by DairyQueen
    A resounding "thank you" to DairyQueen for exposing so many inconvenient truths with such clarity.
    .
    • crv1963
    • By crv1963 6th Feb 18, 7:31 PM
    • 287 Posts
    • 692 Thanks
    crv1963
    Definitely agree that it's much tougher for someone single to save/plan for a decent retirement.

    I don't think you can compare someone who enters retirement single to those who do so as a couple, and then become single (widowed/divorced). The former will have planned their finances based only on their own resources, the latter will almost certainly have viewed all pensions/assets as one pot regardless of the name on the tag. Singles are likely to have less household income from the get-go whilst couples need to plan for (possibly) a big reduction in income on the first death.


    I see lots of threads discussing retirement finances. Most seem to be in couples and they base their 'number' on lifelong availability of both parties' total guaranteed pension income. It's hardly mentioned that the new SP will either disappear or significantly reduce on death, or that any DB pension will reduce by 50%.

    Often one of a couple has a much bigger pension than the other but most people don't have massive individual pension pots. The average income for a retired couple is now in the region of £25k. For home-owner couples with no mortgage that sounds pretty reasonable. But what it it consists of two SPs, plus one person's £7000 DB and a £2k drawdown (other person's name)?

    First death (if higher pension earner): household income reduces to approx. £13.5k.
    First death (if lower pension earner)): household income reduces to approx. £17k (assuming survivor inherits balance of DC/SIPP and drawdown at the same rate is sustainable).

    That looks like a pretty drastic drop in household income to me, especially for the lower income pensioner.


    End of over-long post and over-long rant (apologies to the forum and, especially, to the OP for hijacking the thread).
    Originally posted by DairyQueen




    Great post DQ, very thought provoking. I have only really concentrated on pensions properly in the past year or so and one of the key factors we need to look at carefully is the poorer pension provision of Mrs CRV compared to mine.


    Mrs CRV will get about a 16k pa loss of income should I go first, compared with my losing 8k if she should go first. Our plans include my building a DC pot (using SS), build as much as possible her pension provision (also DC) and using our ISAs. With the idea that these will pass to the other on first death and anything left over to heirs (a big if as one son tells me to start SKI-ing- spend the kids inheritance!). I think that maybe one more pension reform is needed- allow transfer of part of the pension saving allowance (the current 40 k pa) to be transferred to the lower earner by the higher earner, just like you can transfer current tax allowance (only a little I agree) from lower/ non earner to higher earner.


    I agree much of the problem has been due to poor pension education, even amongst those with reasonable general education, let alone those who rely on tabloids for advice. I thought I was quite savvy until I spent time reading up including this forum. It all goes over Mrs CRV head and she just wants to know like many people what is the bottom line.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • DairyQueen
    • By DairyQueen 6th Feb 18, 8:01 PM
    • 244 Posts
    • 400 Thanks
    DairyQueen
    One thing missed is that men tend to follow their wives into the grave while widows carry on as before.
    In addition, forty years ago some women chose to pay a smaller stamp.
    Originally posted by OldBeanz
    The sad truth is that their widows don't 'carry on as before'. They carry on with much reduced incomes.

    As for the 'married woman reduced stamp'. Yep, they chose to do this but at a time when they were considered dependents of their husbands and could rely on their husband's SP to compensate for their lack. Those were the days when male pay vastly out-stripping female pay (even more so than currently). Those were also the days when every penny of current income was needed to pay basic expenses. For the record, my parents went without proper food for weeks when my dad switched from weekly to monthly pay. They did so in order to make sure that decent food/heat/housing were maintained for me and my sibling.

    Can you imagine that happening now?

    That was the early 1960s. I rest my case.
    • DairyQueen
    • By DairyQueen 6th Feb 18, 8:09 PM
    • 244 Posts
    • 400 Thanks
    DairyQueen
    Excellent post DQ.

    So many of the points you raise are why I am reviewing my/our own pension position in light of the overall situation (with / without me).
    Originally posted by cloud_dog
    Ditto We have decided to manage this by keeping non-discretionary expenses within a range supportable on the lowest possible pension income available to each of us. We would rather do that than 'upscale' our lifestyle and then face downsizing/struggling when the first of us dies.
    • ams25
    • By ams25 6th Feb 18, 8:37 PM
    • 159 Posts
    • 186 Thanks
    ams25
    What a great post DQ. And spot on...we are in exactly this position, with a very substantial income hit if I go first (likely as I am male and older). But we know about it and with a mix of pension pots, isas etc at least we can plan for it. Too many are in blissful ignorance.... it should be better publicised.

    Mind you the same applies to pension/retirement saving generally. Many posting here with high 6 and 7 figure pension pots are those that have understood the value and will reap the rewards. But why so relatively few. Personal finance needs to be taught in schools to fix this.
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