Four important financial steps to consider prior to death

By Sarah Egan

Our reluctance to talk about death likely comes from the Victorians, but here’s the thing: you are definitely going to die, I am definitely going to die, we are all going to die. Every one of the nearly 8 billion people on this planet will die, including the 60 million people in the UK and everyone in your city, town, or village.

Some will die today, some tomorrow, and some not for a long time, but everyone will die within their own lifetime. We make no apologies for addressing death directly. Part of our job as financial planners is to manage the financial risks of premature death. If we can talk about it and think about a world without us, we can plan for the worst and help our loved ones prepare for life without us if disaster strikes.

If you’re part of a couple, this might be a scary thought. One of you will die first, and the surviving partner will face the future alone, possibly for the first time in a long time. Losing a loved one is never easy, and financial worries can add to the burden. If your partner dies, you may face an unexpected loss of income, especially if they received a UK State Pension. The loss of a State Pension is something almost no one considers.

UK State Pensions After a Spouse’s Death

Not all UK State pensions are lost when a spouse dies. It depends on the type of pension and your circumstances. Here’s a breakdown:

  • Basic State Pension: If you were married or in a civil partnership and your spouse paid enough National Insurance, you might inherit their basic state pension.
  • Workplace Pension Scheme: If your spouse was in a workplace pension scheme, you might be eligible for a guaranteed minimum pension.
  • Deferred Additional State Pension: If your spouse had this, you might receive it after their death.

Navigating pension bereavement can be tough. Here are some resources for help. These services offer guidance on claiming your deceased spouse’s pension:

  • Local Services: Provide free and confidential advice on financial matters, including bereavement benefits.
  • Financial Advisor: They can analyse your situation and recommend the best course of action.

Steps to Take

  1. Contact DWP: Inform them of your spouse’s death and gather information about your benefits.
  2. Gather Documents: Provide DWP with your marriage/civil partnership certificate, spouse’s National Insurance number, and a death certificate.
  3. Apply for Benefits: Fill out and submit the relevant forms to the DWP. Remember, deadlines apply.

Additional Support

  • Widowers and Widows Association: Offers emotional and practical support.
  • Cruise Bereavement Care: Provides individual and group support for grief and loss.
  • Age UK: Offers information and advice on finances and benefits.

Mitigating Pension Loss

  • Before Retirement: Use both of your pension allowances. Ensure you have a death benefit nomination form in place for personal pensions.
  • Defined Benefit Pension: Typically, there’s a 50% spouse’s pension. Building up personal pensions can help soften the reduction.
  • After Retirement: Contribute £3,600 gross into a pension even without relevant income, up to age 75. If you have earnings over £3,600, you can contribute up to 100% of your earnings, capped at £60,000.

Final Thoughts

Losing a loved one is hard, but understanding your entitlements and seeking support can help. Take the first step and reach out for help.