Will your pension die with you?
What happens to your pension when you die? Your Government state pension finishes with you but what about any other pensions you are taking? Have they got provision to carry on when you are no longer here, benefitting your family?
This week Talk Money Talk Pensions has opened up the debate for and between people to discuss their financial well-being.
Almost 5 million people who are in retirement are not satisfied with their income. That’s quite a lot of dissatisfied pensioners. What can be done about this? Is this something that might affect you?
Take getting a new job, for example, you usually know or find out the wage associated with it in order to decide to take it and make plans for your future finances. Retirement is no different. You need to find out about each of your pensions. What you are entitled to, when and what each one does for you and your family. You may find that you are entitled to a lump sum pay out at the beginning of your retirement, often tax free. If this is the case, what plans do you have for this money? Paying off a mortgage perhaps, saving for a rainy day, spending it all on treats for yourself? How does this plan affect your family and their future? What provision have you made going forward or trying to identify unknown needs?
Firstly, you will need to talk to people at home about when your pension is due, whether its index linked and crucially what happens when you die. Some private pensions make an allowance for a spouse or named person in the event of your death. Furthermore, if you die younger than expected, for example whilst you are still working, called ‘in service’, your private pension plan could state that it be paid to a nominated person.
It’s time to take a look at exactly what your pension does for you and possibly more importantly what it can do for those left behind. If you find out that the pension dies with you then you will be able to plan for the future, similarly if you find that a proportion of your private pension is transferable then this will need to be planned for as well. Finding out about your pension will give you and those around you, peace of mind as everyone will know what will happen, whatever that is, when you die.
It’s not morbid to open up the conversation about what happens with money when you die. Its sensible and responsible towards those who are left behind.
Terri Bourne is currently writing a book about retiring from your small business.