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Have you ever thought about who will inherit your pension? It surprising that the vast amount of people have never considered it.

 

You save for most of your adult life into your pension. You probably see your pension as a nest egg to provide for you and your family in the future but what will happen to your pension if you pass away?

 

There are a few different things that can happen to your pension on your death and considering there may be quite a lot of money on the line you would be foolish not to protect it.

Dies with You

In some instances when you pass away your family are not entitled to any payment from your pension fund. This essentially means your pension fund dies with you. If it was your intention that your pension fund would support both you and your partner in retirement which is common this poses a real threat should anything happen to you.

Reduced Benefits

In some cases the amount paid from your pension fund may decrease dramatically for example by 50% in the event you pass away. This is very common in defined benefit pensions. This in addition to the risk that the fund may be unable to pay the promised benefit (Fund Solvency) can be a real concern.

Can be Inherited

The ideal scenario is that your fund can be inherited by your family. Of course this risk needs to be evaluated in addition to any other risk and a decision reached based on your individual circumstances. For example if you have no next of kin the issue of inheritability will probably not be too concerning. 

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