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26 Jul 2017

Risk of pension benefits going to the wrong person when you die, warns Royal London

Who will get your pension benefits when you die? With recent figures from the Office for National Statistics (ONS) showing increased rates of divorce and marriage among over-65s, Royal London has warned of the growing risk that people´s pension benefits will go to the wrong person when they are no longer around.

The mutual insurer said it was important that older people who get married or divorces — so-called ‘silver splicers´ and ‘silver splitters´ — keep their pension scheme details up-to-date.

Many pension schemes have forms that allow members to nominate a beneficiary to receive an ongoing pension or lump-sum benefit payments if they predecease them.

But if that form is not updated when someone changes their marital status, an ex-spouse could end up receiving the benefits instead of a current spouse or partner. It also means that children and stepchildren from a new relationship may not be provided for.

Royal London noted that, if information is out of date, scheme trustees and administrators can undertake their own investigations into the personal circumstances of the deceased at time of death, to decide who should be paid. However, keeping nomination forms updated can make the process much quicker and helps to make sure the money goes to the right family members.

Helen Morrissey, personal finance specialist at Royal London, said: “Far more people are either getting married or separating later in life than in the past. As well as new spouses and partners, this brings new children and stepchildren into the mix. We would encourage anyone who has changed their marital status since they first joined a pension scheme to make sure that the scheme knows their wishes. This includes pension rights that you may have built up when you worked for previous firms.”

Data from the ONS reveals that the number of brides and grooms aged 65 and over rose by 46% in just 10 years, from 7,468 in 2004 to 10,937 in 2014.

At the same time, over-65s are going against the declining divorce trend with the number of men aged 65 and over getting divorced increasing by 23% between 2005 and 2015 and the number of women aged 65 and over getting divorced increasing by 38%.

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