Drawing down pension/prsa

mr j tayto

Hi guys,

I always presumed that when one became eligible that your pension scheme would pay a monthly amount based upon the value of the pension fund, however I recently learned that there are various ways of drawing down a private pension/prsa, i.e : 25% tax free lump sum plus a pension, guaranteed 5 year pension, spouses pension to mention a few options. The reason I ask is because a relative recently passed away and their pension effectively died with them insofar as their partner was not entitled to the remaining part of the pension. Is this normal?

Hani Kosti

Yes, depending on what type of annuity was purchased, such as options below :
Single/dependant
0 to 10 years guarantee
Reversion (% to be paid to dependant after death)
Escalation
Overlap (is dependants pension be paid only after guaranteed period or during and after)

So if a single life pension was purchased, such annuity "dies" with the annuitant.

mr j tayto

Thanks for your reply.

In a situation where the pension owner is a married person with dependents what in your opinion would be the best way to draw down a pension?

My pension is in my own name with no provision made for transfer to my spouse in the event of my death. Presumably I should change this asap?

Hani Kosti

If your pension is already in payment, you cannot change it.

If you're invested in a pre retirement products, the value of the pension forms part of the estate on your death (if you're in a scheme, there might be a death in service and/or widow's pension)

I would recommend talking to a financial adviser who can assess your current situation and recommended a proper course of action. I'm suggesting this as I don't know your background, savings/investments/debts, family or medical status

mr j tayto

Once again thank you.

I'm not very good at these things. I will contact an advisor to discuss my particular circumstances.