Ever thought about what happens to your pension after you pass away? No, we thought not. You’re not alone though as most people are focused on assets such as a home, business, or valuables when preparing their will, in the belief that a pension will automatically pass on to a nominated beneficiary. It isn’t always that simple though, so this month’s article takes a look at the various types of pensions available and what you may need to do to ensure that yours is set up to benefit your loved ones after you pass.
Most of us have a state pension. The first thing to do when a loved one passes away is to let the Pension Service know so that payments into it are stopped. You may be eligible to payments from that pension, but you must be over the state pension age in order to claim extra payments and it will also depend on the level of National Insurance contributions made up to that time. The best way to get this sorted quickly is to get in touch with the Pensions Advisory Service. Keep in mind that should you remarry or enter into a civil partnership before you reach state pension age you will not be able to claim it.
Workplace and personal pensions
Receiving payments from a workplace or personal pension scheme will be dependent on the scheme and how it was initially set up. If you know the pension provider or employer get in touch with them or the pension administrator to find out whether you can claim it and how to do so. The pension scheme may a defined contribution or a defined benefit one; knowing how it was set up will determine what you are entitled to and when. For example, if the deceased is over or under the age of 75 when they passed will have different tax rules and entitlements for a defined contribution scheme.
A few things to remember
Whether you are setting up a pension or looking into what to do once a loved one passes away, there are a few things to keep in mind:
- If you are setting up a pension and want your loved ones to benefit, talk to your pension administrator. Alternatively, you can talk to an independent financial advisor who can help you to get things right from the outset.
- Keep your pension documents in a safe but accessible place for your beneficiaries. Keeping them with your will would be a good option, for example.
- Ensure you have up-to-date documentation which sets out how you want your beneficiaries to inherit your pension.
- Let you pension administrator know if anything changes so that their records are complete and up to date, particularly if your wishes change at any point.
For more information or personalised advice on how to deal with pensions as part of your estate, talk to us at Probate London. You can drop us a line on firstname.lastname@example.org or give us a call on 020 8017 1029 to set up an appointment, or for an exploratory chat.