Occupational pension query

[Mr.Chips]

Hi Guys,
My self and SWMBO both worked in local authority education, me as a teacher, Mrs.Chips as a teaching assistant. We both retired before we reached state pension age, me at 60 (5 years ago), Mrs.Chips at 63 (2 years ago). We are both in reasonably good health and are currently trying to get everything in order while we still have all of our marbles. We both have wills and lasting powers of attorney set up. What we would like to know is, what happens to our occupation pensions when we croak. Do they die with us or is there a portion that can be bequeathed?
Apologies if this is a stupid question, but all positive contributions will be gratefully received.

[mikef]

Totally depends on the scheme, you'll need to look it up or ask them

For instance, my wife's USS (Universities Superannuation Scheme) pays 50% monthly to surviving spouse. Her other DBs pay 2/3rds monthly. My DB scheme pays 50% to surviving spouse but only for five years.

[omniflow]

Bequeathed - probably not.

50% Spouse's pension - probably.

They tend to be quite old fashioned. so Spouse means legally married. I know a few people who have married very late in life specifically to facilitate the Spouse's pension.

As above, you need to check the specifics.

[LeoSayer]

There's loads of good info on the LGPS website:
https://www.lgpsmember.org/faqs/will-my-dependents...

If you have an AVC / Defined Contribution / SIPP ie. an invested pension pot rather than a defined benefit (eg. final salary / career average) then that can be passed onto beneficiaries outside of your estate.

[ferret50]

'er indoors will get half of my RAF pension in the unlikely event of me handing my dinner pail in first!

[Countdown]

Mr.Chips said:

Hi Guys,
My self and SWMBO both worked in local authority education, me as a teacher, Mrs.Chips as a teaching assistant. We both retired before we reached state pension age, me at 60 (5 years ago), Mrs.Chips at 63 (2 years ago). We are both in reasonably good health and are currently trying to get everything in order while we still have all of our marbles. We both have wills and lasting powers of attorney set up. What we would like to know is, what happens to our occupation pensions when we croak. Do they die with us or is there a portion that can be bequeathed?
Apologies if this is a stupid question, but all positive contributions will be gratefully received.

My guess is that you're in the TPS and your wife is in the LGPS.

from memory (and apologies, it's been a very long time since i worked in Schools finance)

You'll both get a tax free Lump Sum when you retire
You'll both get an index linked pension depending on your final salary (or career average for your wife depending on when she joined the LGPS)
If one or both of you croaks it within the first 5 years I think your estate will get a payout
If one of you croaks it the other spouse gets half of the deceased's pension
If you die and have any dependants (kids under 18 or under 21 but in full time education) they will get a certain percentage of your pension.

If/when you are both dead and you have no dependants your pension finishes. There isn't a portion that can be bequeathed. (Apart from the Lump sum)

[BoRED S2upid]

Spouse will get something whoever does first but your pension does with you. Make sure you have taken out the 25% lump sum or whatever it is as that cash can be left in your will.

[Mr.Chips]

Thanks for all the info guys. Some useful stuff for us to look into.

[Zigster]

BoRED S2upid said:

Spouse will get something whoever does first but your pension does with you. Make sure you have taken out the 25% lump sum or whatever it is as that cash can be left in your will.

I do t think it’s quite as straightforward as that. TPS and LGPS are (were*) “cash on top” schemes - 80ths pension plus 3/80ths cash lump sum. You can usually give up some of your pension for an additional lump but the terms are pretty stingy in public sector schemes with commutation factor of just 12. I’d question whether it it is worth commuting any pension at that rate.

* It’s changed a bit since “McCloud and the move to career average schemes.

[steve_n]

mikef said:

My DB scheme pays 50% to surviving spouse but only for five years.

You've misread that. Pays the full amount for the first five years whether you're alive or dead, then 50% to your spouse for as long as they live beyond you.

[mikef]

steve_n said:

You've misread that. Pays the full amount for the first five years whether you're alive or dead, then 50% to your spouse for as long as they live beyond you.

Even better! Cheers

[Rushjob]

If, like me, you assigned your pension years ago, if you have divorced or otherwise separated and wish your current partner to benefit from the survivors pension, then please update your wishes with your pension provider. This happened to someone I know and they unfortunately hadn't changed the bequest details. Luckily their ex parter was a decent sort who allowed the survivors benefits to be transferred appropriately as per the relationship and will at the time of death. Not everyone is a decent sort.