What happens to your pension if you die?

Hollister11

What happens to your pension if you die?

For example if you paid into a private pension, and made contributions to a state pension, and your spouse never paid into a pension, would they then take over your pension based on your contribution?

GerardKeating

Hollister11 wrote: »

What happens to your pension if you die?

For example if you paid into a private pension, and made contributions to a state pension, and your spouse never paid into a pension, would they then take over your pension based on your contribution?

A pension is paid from retirement until death, so when you die, any pension benefits is lost.

Some (but not all) Pension schemes also include a Spouse benefit, which could continue after the death of the pensioner.

Bob24

I'm not a pension specialist but I guess it depends what is meant by pension ...

As far as understand if you die before cashing in the pension (i.e. while still in employment and contributing to it) it most likely won't disappear and will be paid to a designated beneficiary.

However if you have already retired and purchased an annuity, obviously what was bought is a regular payement until the time of death, so it will stop at time of death.

mickmac76

I looked into this last year and it can be complicated. If you die before you reach pension age the money paid in will become part of your will and be distributed as laid out there. If you are married your pension may be paid to your spouse upon your death if the pension scheme allows it and if you have signed up to it. The amount paid out may be limited in some circumstances by revenue. Some pension schemes also have a death in service benefit and pay a lump sum if you die before pension age if you are still employed by your employer. This is usually around 3 times your annual salary. The above applies to defined contribution pensions, I don't know what happens with defined benefit pensions.

coylemj

Bob24 wrote: »

As far as understand if you die before cashing in the pension (i.e. while still in employment and contributing to it) it most likely won't disappear and will be paid to a designated beneficiary.

OP mentioned a 'private pension' which I assume means not an occupational (i.e. company) scheme so what you say is correct - if you die before drawing any retirement benefits then the fund is part of your estate and could be bequeathed in your will to your spouse who would inherit it as a lump sum.

Bob24 wrote: »

However if you have already retired and purchased an annuity, obviously what was bought is a regular payement until the time of death, so it will stop at time of death.

Two qualifiers to this point....

1. A lot of annuities pay for a minimum term after commencement so will continue to pay for this term even if you die.

2. When buying an annuity you can include a spousal ('survivor') benefit such that your other half would receive a reduced annuity on your death for his/her life. Clearly invoking this option means that you will receive a smaller annuity because it will cover two lives.

Henry Ford III

GerardKeating wrote: »

A pension is paid from retirement until death, so when you die, any pension benefits is lost.

Some (but not all) Pension schemes also include a Spouse benefit, which could continue after the death of the pensioner.

Not true. A pension is as you say payable for life, but most have a guaranteed period - normally 5 years, so if someone retires today and is killed in an accident tomorrow the annuity will be paid into their estate for 5 years.

Anyone retiring from a d.c. occupational scheme or the self employed will have an option to include a spouses pension. Depending on the individual circumstances the pensioner may have access to the ARF regime.

Having said that with ultra low interest rates annuities aren't very attractive.

As always get proper advice, as mistakes can be expensive.