To most of us, pensions are somewhat of a mystery. We see the contribution in our payslips disappear into a mysterious pot and seldom give it a second thought. However, should your spouse or civil partner die before you, here is what happens to their pension.
A pension is a tax-efficient way of saving for retirement. There are different types, but the main ones are state pensions, workplace pensions and personal pensions. A state pension is a monthly payment from the government and is based on how many years national insurance contributions are made. You need at least 10 years to qualify, and you’ll typically get the full amount available if you have 35 years or more of contributions. You’ll monthly payments will start when you reach state pension age (typically between 62-68 depending on your birthday). You can calculate your state pension age here. A workplace pension is a scheme that’s set up by your employer. If you’re 22 or over and earn more than £10,000 a year, your employer must enrol you in a pension scheme. Both you and your employer pay into your scheme each payday. There are two types of workplace pensions: defined contributions and defined benefits. You can read more about them here. Finally, personal pensions are ones that can be created independently and can be paid into pay into at your discretion.
If your spouse has died and was drawing a state pension, the Pension Service will need to be informed so that the payments can stop. You can find out how to do this here. You may be entitled to extra pension payments from their state pension. This will depend on the number of national insurance contributions they made over their lifetime and when you and your spouse reached (or would reach, if they died before they started claiming) state pension age. You can find check what you might be entitled to here.
If your spouse was employed, your first port of call should be contacting their pension provider to find out how much is it in and they should signpost you to the next step. If you are not sure who their pension provider is, start by contacting their employer to see if there was a current workplace pension. If the employer cannot help you find the pension, then you can try the Pension Tracing service, details of which can be found here. What and when you can claim will depend on the type of pension they had: defined contribution and defined benefit. The rules are different for both types and are dependent on which scheme they were registered with.
As with workplace pensions, you may be entitled to payments from your spouse’s private pension as well. This will also depend on the scheme they were registered with and its rules.
The rules around pensions are among some of the most complex in law, partly due to recent amendments to the pension age. At Ackroyd, we are dedicated to helping you get access to the money that you’re entitled after the death of your spouse. Get in touch today.