Under most final salary scheme i.e. teachers, civil service, firemen, local authority workers in the event of death before or after retirement there is a 50% reduction in the pension in payment payable to the spouse for their lifetime.
Even on a generous pension of some £30,000 you can see there is an immediate reduction to £15,000 i.e. a loss of £15,000 per annum for the surviving spouse.
This means that the plans for retirement can go completely wrong as moving from £30,000 to £15,000 a year is substantial even through there is only one surviving person but their lifestyle would probably go with it.
These particular individuals have good income streams and are crying out for their income and lifestyle to be protected.
We have a solution to protect your pension to age 75 upon death for your surviving spouse?
Using the above example we would nominate a family income benefit of £15,000 per annum (£1250 a month) which would be paid tax free to the surviving spouse on a monthly basis. There will be no need for probate, solicitors or fees involved.
This is a very attractive feature as it requires no administration at the time of death. All that is required is a death certificate for prompt payment of benefits.
Obviously the earlier one secures life assurance the cheaper the monthly premium is and hence all should be approached but most popular time would be to pick up somebody in their early 50’s to pick up a lower rate for their age and health.
Alan Brown – IFA – Pensions Specialist
Tags: Pensions, retirement
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