The State Pension saw the biggest increase in years this month, thanks to the Conservative triple lock system. If you have 35 years on your record, you will now receive the full pension of £175.20 a week instead of £168.60. This is an increase of more than £300 a year. But what happens to your Pension if you die? And what do you about your other half’s Pension if they die?
What happens to your State Pension when you die?
According to Pensionwise.gov.uk, the way you take your pension will affect how you can leave it to your beneficiary when you die.
The website says: “Most pension options allow anyone to inherit your pension – they don’t have to be your spouse or civil partner.
“Make sure your pension provider has up-to-date details of your beneficiary.
“If you have more than one pension, let all your providers know.”
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There are some types of pension that you can leave to someone after you die.
The payments your beneficiary gets depends on a few things, including their age and their health.
Joint annuity payments, for example, will continue to your beneficiary after you die.
But when they die, they won’t be able to leave these payments to anyone else.
Payments from an annuity with a guaranteed period will continue even if you die before that period ends.
The guaranteed period starts when you take the money from your pot.
‘Value protected’ annuity, but capital protected annuity is when your beneficiary inherits a lump sum.
The payment is your pot, minus any annuity payments you took before you died.
You can choose who you want to receive any money left in your pot after you die.
Can my tax-free lump sum cash be inherited?
When it is time to take your pension benefits, you might have the option to take some or all of your pension in a cash sum.
This depends on whether your pension is in a defined contribution scheme or a defined benefit scheme.
Pensionwise.gov says “If you take your tax-free lump sum but don’t use it before you die (eg it’s left in your bank account), it becomes part of your estate.
“It then forms part of everything you own and all your money when you die.
“Your beneficiary may need to pay Inheritance Tax on it.
“The same is true if you take your whole pot in one go or in chunks but don’t use it all before you die.
“Your beneficiary can take money still in your pot as a single lump sum or use it to buy an annuity or adjustable income.”
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What do you do about someone’s Pension when they have died?
A Pension won’t just end when someone dies, you need to do something about it.
When the person dies, you must inform the Pension Service so that payments stop.
You can ring the Pension Service helpline on 0800 731 0469.
You may be entitled to extra payments from your deceased spouse’s or civil partner’s State Pension.
However, this depends on their National Insurance contributions, and the date they reached the State Pension age.
If you haven’t reached State Pension age, you might also be eligible for Bereavement benefits.
You need to check the person’s paperwork to see if they had any personal or workplace pension schemes.
If so, you should contact the provider to find out how much they had and get advice on what to do next.
If you aren’t sure who the pension provider is and the deceased was employed, you should contact their employer to find out more.
Find out if the personal or workplace pensions were defined contribution pensions or defined benefit pensions.
If you are totally stuck for information, ring the Pensions Tracing Service on 0800 731 0193 to find out if the deceased had a pension at all.
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