When someone dies, their pensions need to be taken care of. You will need to seek accurate and up-to-date pension advice about what to do with the deceased person’s pensions and, in many cases, a spouse or child could claim some benefits. This will depend on the age of the deceased, who their beneficiaries and dependants are, and what type of pension they had.
Follow these steps to know what to do when a loved one passes away:
Register their death within five days.
Make funeral arrangements. This can be done any time after the death and your local funeral director can help you arrange this.
Use the Tell Us Once online service to inform the Government about your loved one’s passing. This service will take care of contacting all related authorities and departments.
Check about your bereavement benefits, taxes, and pensions. We will go through each type of pension in detail below.
Deal with their property, estate, deeds and other financial affairs or wills.
Tens of thousands of widows and widowers could be missing out on their right to a state pension because they do not know the rules and guidelines. Since not all payments are automatic, you will need to know when you are eligible and how you can apply.
The amount of state pension you receive will depend on your circumstances and when you qualified for the state pension. This will also affect the amount of state pension your partner will receive upon your demise.
If your deceased partner was receiving a State Pension, you need to inform the Pension Service immediately so that payments stop to them, and you might be entitled to extra payments from their scheme as well. This is based on your partner’s National Insurance record.
You will not be entitled to any of these payments if you have remarried or have not built your own eligible National Insurance record. If your partner contributed towards an additional State Pension – also known as the State Earnings-Related Pension Scheme (SERPS) and State Second Pension, you may be able to inherit some of this.
Most company schemes and private pensions are defined contribution pensions. In this scheme, the amount you end up with at retirement depends on how much you (and your employer, if it’s a workplace scheme) have paid in, as well as how the funds your pension is invested in perform. If you die before you’ve retired, the value of your plan will usually be paid as a tax-free lump sum to the person you nominated when you set up your pension. If you didn’t nominate anyone, the trustees of your pension can award it to any person who is financially dependent on you at the time of your death.
The income provided by an annuity pension usually dies when you do, although this isn’t always the case and some annuities may continue to provide an income for a dependant. This could be your wife or civil partner or your children. If you die before the age of 75 the annuity payments paid will be tax-free. However, if you die after the age of 75 then any payments will be taxed as income at their marginal rate.
A workplace pension, or occupational pension or company pension, is a way of saving for your retirement that’s arranged by your employer. Every payroll, the employer may take a percentage of your salary to put into the pension scheme, which is a good way to encourage people to start saving throughout their career. Private pensions work similarly to workplace pensions, but you set them up yourself instead of your employer. You can consider this if you are self-employed, would like to save extra money for later on or need to top up your workplace pension scheme. With both type, you can indicate a beneficiary who will inherit your pension fund.
The deceased person’s child might be able to get paid a pension if they are:
Mentally or physically impaired
Under the age of 23 and in full-time education
Financially dependent on them
If the parent dies before the age of 75, the chosen beneficiary can be given any remaining money from their workplace or private pension schemes. If the death occurs after the age of 75, the child will likely have to pay a high Income Tax on the amount.
You will not be able to pass on the right to your State Pension to your children or grandchildren after your death. If you are receiving a state pension, you might be able to pass the benefit on to your family as gifts. However, it is important to remember that there are annual limits on how much you can give tax-free, so consult a professional for guidance on this matter.
You might not have considered setting up your child’s pension before, but a substantial yearly allowance could give your child a financial head start for a secure future. Pensions for children can be set up by the child’s legal parent or guardian while they are under 18 years of age and can be accessed once they are of retirement age.
If your husband, wife, or civil partner has passed away in the last 21 months you may be able to get Bereavement Support Payment (BSP). To get the full amount, this must be claimed within three months of the death. The longer you wait, the more likely you’ll be given a smaller number of monthly benefits.
To be eligible for Bereavement Support Payment (BSP), the following criteria have to be met:
You will need to have been married to, or in a civil partnership with, the deceased to be eligible for Bereavement Support Payment.
Your partner must have made at least 25 weeks’ worth of National Insurance contributions.
The deceased suffered a job-related death due to an accident or illness because of their work.
Because BSP is linked to National Insurance contributions, you can claim this only if you have not yet reached the State Pension age. This means you are eligible to apply if you are between 45 and 55 years old.
You cannot claim BSP if you:
Have children dependent on you (Widowed Parent’s Allowance will be applicable in this case)
Were divorced when they passed away
Were not living together in a marriage or civil partnership at the time of their death
Are spending time in prison
You will get an initial lump sum of BSP, followed by 18 monthly payments:
While Profile Pensions does not offer advice on widows pensions and bereavement support, we do strive to provide clear industry information to make you better off in retirement.