Widowers pension

[oldaudi]

Good afternoon
My wife passed away in August of this year. The finances were easy to sort out but Im now paying attention to her pensions.

She has one old pension which her old employer is now paying to me. It’s £200ish a month, she was only there for a short time and they will start Payment this month. Now, I’m in my early 40s and it seems odd receiving a pension. Will this impact my tax code? I already do a self assessment because I pay into a SIPP and like to ensure I get the extra 20% (with 20% already being paid by Hargreaves lansdown). My tax code is always different depending on how much I pay in each year

She has her current pension from her employer at death. They can offer me a monthly payment or an in death service payments at 4* her salary. I’m double checking this because my employer will pay my pension to those on my expression of wish form and the Death in Service payment is a separate payment. I don’t understand why hers is one or the other. What sort of maths do I need to do to work out the best option? I’m assuming a lump sum may need to go on the self assessment and is taxed? Or not?

Ideally I’d like to pay it all to our children, into their SIPP or into the stocks and shares trusts. Can I ask for it to be paid directly to them therefore bypassing any tax payments from me?

The life insurance paid out and I’m in a position where I may give up work/slow down. Become a full time farther and animal “look afterer”. I’ll probably seek proper advice regarding taxes and pension before perusing that next year. Her short illness and death has certainly made me change my view on life

Thank you

Edited by oldaudi on Saturday 13th November 16:47

[AndyAudi]

Something I was told sorting out my will/finances was,

Any lumpsum pensions/death in service from my company would not form part of my estate & would be paid out at the pension fund trustees to those they deemed appropriate. Everyone was supposed to fill out an “expression of wish” to help the trustees but this was not binding & the trustees could do something different if they felt appropriate.

[The Leaper]

Sorry to hear your news.

You say "She has her pension..." However, that pension would have come into payment at her normal retirement age which will not happen now, so that entitlement has lapsed.

You are getting the widower's pension. HMRC will regard this as income to you and taxed accordingly. You will need to include it in your SA.

The lump sum death in service benefit is almost certainly payable through the employer's pension scheme under a discretionary trust. The trustees decide on the destination of the payment or payments among all the beneficiaries (they will be defined in the trust deed). The trustees' discretion is not whether or not to pay the death benefit: the discretion is which beneficiaries will receive it, after the trustees have fully investigated all potential beneficiaries, financial dependency etc. Payments under discretionary trust are paid direct from the trustees to the beneficiaries and not via the deceased's estate, so payment can usually be made quite quickly, they do not fall within probate, and there's no inheritance tax liability on such payments.

I'll leave others to comment on your proposals etc as to how to uses the money once received.

R.

[oldaudi]

Thank you for the detailed responses. Her employer from 1999 to 2008 has sent me a letter saying that her pension that she had been contributing to will now be paid to me starting this month at £200 a month.... so it’s not a government basic pension being paid out it’s her old work pension that she stopped paying in to when she left them. Is that a normal thing to happen? Where does that money come from? There cannot be enough in there to pay me £200 a month from 43 years old until I die...

Edited by oldaudi on Saturday 13th November 17:49

[The Leaper]

oldaudi said:

Thank you for the detailed responses. Her employer from 1999 to 2008 has sent me a letter saying that her pension that she had been contributing to will now be paid to me starting this month at £200 a month.... so it’s not a government basic pension being paid out it’s her old work pension that she stopped paying in to when she left them. Is that a normal thing to happen? Where does that money come from? There cannot be enough in there to pay me £200 a month from 43 years old until I die...

Edited by oldaudi on Saturday 13th November 17:49

I did not assume that the £200 pm was a government/state pension being paid. It looks like an old deferred pension from an occupational pension scheme that, had you wife not died, would have commenced at her normal pension age under the occupational pension scheme

Paying you her pension does not seem correct. I suspect that they have said something wrong or there's been a misunderstanding with what's been said. Maybe they are saying that there's an associated widower's pension that is the £200 pm to be paid to you. I cannot see any reason why they will pay "her" pension to you.

R.

[softtop]

does it matter what age the wife was? Why is a pension being paid unless the wife was over 65 or 67? Whatever the age is now.

[Countdown]

softtop said:

does it matter what age the wife was? Why is a pension being paid unless the wife was over 65 or 67? Whatever the age is now.

IIRC Local Govt Pension Schemes pay a spouse's pension if the Member dies, even if they've died before reaching retirement age.

However I believe there is a rule in the small print that the spouse's age has to be within 10 years of the Pension Scheme member. This is to stop a 75 year old marrying a 20 year old partner and then the latter being entitled to a spouse's pension for 50+ years.

[oldaudi]

This is what’s confusing me... she was late 40s Left the company years ago and every year she just received a statement. Wasn’t available to her until she retired. Yet here I am with £200 a month supposedly now heading to my bank account. I had to provide evidence of us being financially interdependent for more than two years prior to her death, bills, bank accounts , joint mortgage, my birth certificate, the kids birth certificate. They contacted me after I used the “tell us once” service...

I would post a photo of the letter but there’s too much personal info on there. It’s with the Environment Agency if that impacts anything unique about the payment! Her other pensions and in death service are also local government, teaching

[Countdown]

oldaudi said:

Thank you for the detailed responses. Her employer from 1999 to 2008 has sent me a letter saying that her pension that she had been contributing to will now be paid to me starting this month at £200 a month.... so it’s not a government basic pension being paid out it’s her old work pension that she stopped paying in to when she left them. Is that a normal thing to happen? Where does that money come from? There cannot be enough in there to pay me £200 a month from 43 years old until I die...

Edited by oldaudi on Saturday 13th November 17:49

You can check by asking the Pension Scheme Administrators to send you a copy of the Scheme rules.

The amount that you're getting is easily achievable. "Back of a fag packet calculations" ;

If she was on an 80ths scheme then 10 years service, finishing at £40k per annum would give her a £5k pension and you a £2.5k pension
If she was on a 60th scheme then 10 years service, finishing at £30k per annum would give her a £5k pension and you a £2.5k pension

[Countdown]

oldaudi said:

This is what’s confusing me... she was late 40s Left the company years ago and every year she just received a statement. Wasn’t available to her until she retired. Yet here I am with £200 a month supposedly now heading to my bank account. I had to provide evidence of us being financially interdependent for more than two years prior to her death, bills, bank accounts , joint mortgage, my birth certificate, the kids birth certificate. They contacted me after I used the “tell us once” service...

I would post a photo of the letter but there’s too much personal info on there. It’s with the Environment Agency if that impacts anything unique about the payment! Her other pensions and in death service are also local government, teaching

Which bit is confusing you? Assuming her final salary was roughly £40k your pension amount seems right.

[Starfighter]

Sorry for your lost OP.

I have been quite close to this in the last few months. My wife just took an I’ll health retirement from a local authority job with terminal cancer.

The pension scheme does pay out a survivor pension to a spouse. It also pays out a dependent pension per child to a certain age. The survivor pension pays for 10 years in our case. The local authority should be able to give a full outline of the scheme. Our’s were very helpful with regard to payout options.

[anonymous-user]

Starfighter said:

Sorry for your lost OP.

I have been quite close to this in the last few months. My wife just took an I’ll health retirement from a local authority job with terminal cancer.

The pension scheme does pay out a survivor pension to a spouse. It also pays out a dependent pension per child to a certain age. The survivor pension pays for 10 years in our case. The local authority should be able to give a full outline of the scheme. Our’s were very helpful with regard to payout options.

See Countdowns post as well, it makes good sense.
OP just said environment agency so it was probably civil service (not local authority)when his late wife was employed before being hived off into an an agency for 'gov financial shenanigans'.

My late wife was civil service for many years until her passing about 5 years ago. I get approx £280 a month 'until my demise' as far as i am aware unless i meet someone else and cohabit or something, if i do it then drops to 50% 'until my demise',

My/our late wife's children also get a 'pension' (the youngest was/is receiving a 'pension' at 12 years old) until they finish 'full time education', whether that be college or Uni, the eldests stopped about 3 months ago after about 5 years.

[The Leaper]

IMO the confusion occurs from the OP's first post when he says

" She has one old pension which her old employer is now paying to me. It’s £200ish a month"

The wording implies to me that the ex employer is paying to the OP the wife's pension. If he had said something like

"I'm receiving a widower's pension from my wife's ex employer's pension scheme of £200ish pm"

all would be clear and OK.

R.

[oldaudi]

Yes sorry about the confusion. I was not clear and didn’t know how to describe it.

Thank you all for your advice, understanding and experience. It does look like it’s all correct and in order given the experience of others. The letter says that they’ve informed HMRC about this new income so I’ll see if I get a new tax code in the post and then applied to my wage slip.

Once received monthly I’ll send the money directly to my daughters accounts and I’ll invest it for them.

Edited by oldaudi on Sunday 14th November 12:20

[williaa68]

I am very very sorry for you loss. It sounds like your wife was working in a job where she would have paid national insurance so you should probably also be entitled to receive Bereavement Support Payment (the old widow's pension). You can apply by phone:https://www.gov.uk/bereavement-support-payment/how-to-claim

I helped a friend with this earlier in the year and it was remarkably efficient and straightforward. She invested the money in her kids junior ISAs.

For the pension where you have an option of a lump sum or an income while the lump sum may be attractive if the pension is index linked then that's a very valuable benefit. At 60 a multiple of about 40 is a good rule of thumb, if you are much younger it would be higher - so if the choice is between 100k and 2.5k index linked pension then it might well be a good idea to take the pension if you dont need the lump sum (e.g. to pay off any debt). Also, if your wife died early in the tax year she may have overpaid tax - you get the full year's allowance, so that might bring an extra few quid.

Good luck with everything. I can imagine this is a very difficult time. Come back if any of us can help further or your local citizen's advice bureau are usually very good too.

[Carbon Sasquatch]

The Leaper said:

The wording implies to me that the ex employer is paying to the OP the wife's pension. If he had said something like

"I'm receiving a widower's pension from my wife's ex employer's pension scheme of £200ish pm"

all would be clear and OK.

The thread title was a bit of a clue...