My late ex wanted me to inherit his pension, but the scheme refuses

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Rejected beneficiary: My late ex-husband wanted me to inherit his bank pension, but the scheme refuses to pay me


I married a guy in 2004 who years before had worked as a manager for a bank. Unfortunately we divorced in 2007, but by 2010 I was his full-time carer, although we did not live together.

During that time my ex-husband named me as the beneficiary of the bank pension. 

He also made me his full beneficiary in a will bought from the Post Office, and he named my daughter as beneficiary if anything happened to me before he died.

Rejected beneficiary: My late ex-husband wanted me to inherit his bank pension, but the scheme refuses to pay me

My ex-husband asked me to check his pension and make sure I would be looked after. We emailed the bank which stated I was the named beneficiary, but on death they would look at the pension pot and probably offer a lump sum, rather than small payments per month, which my ex thought fair.

He died in 2019. I had insured him so his funeral was covered and obviously I and my daughter made all arrangements to clear his house and inform all agencies.

I informed the bank pension scheme and sent a copy of his will. They replied that I could not make a claim for his pension, as we were not married.

I cannot find copies of the emails we previously exchanged about the pension.

My question is, is this correct, fair and lawful? Because if this so, what is the point of someone making a spouse or a friend a beneficiary in the first place?

The bank knew we did not live together and I spoke to them on phone informing them we were divorced but I was my ex’s carer.

I took what they said at face value, but feel that my ex was cheated. He died believing I would get a little cash from his pension.

SCROLL DOWN TO FIND OUT HOW TO ASK STEVE YOUR PENSION QUESTION     

Steve Webb replies: I can understand your sense of unfairness about what happened to your ex husband’s pension after he died. 

It sounds as though you were clearly the person he wanted to benefit. Unfortunately, the way things work in practice is not always in line with the wishes of the person who has died.

Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below

Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below

It may be helpful to distinguish between an ongoing regular pension and any lump sum death benefit (particularly relevant if someone dies while still in service).

Starting with an ongoing pension for a widow or widower, any occupational pension scheme will have ‘scheme rules’ and it is these which decide who gets any regular pension after a member has died.

In some schemes the rules will state that a survivor’s pension can only go to someone who was married to (or in a civil partnership with) the person who died.

In other schemes the rules will have been updated to include partners who have lived together and were financially inter-dependent. 

But it is the scheme rules that matter rather than a will or any other paperwork. If your late ex-husband’s scheme only provided for a widow to receive a pension then unfortunately they could not pay out to you once you were divorced.

Turning now to a lump sum benefit, the trustees have to use their discretion to decide who should benefit.

In many cases this is relatively straightforward. If the person who died was married and they had completed an expression of wishes form in favour of their spouse, then there is little doubt as to what the trustees would do.

Things have however got much more complex in a world where it is far more common for people to marry more than once during their life or where they may live together in a couple with someone to whom they are not married. 

In the latter case this can vary between something short-term and informal where the two remain largely independent to cases where couples live together for decades and are entirely financially interdependent. 

The trustees can sometimes face a tricky choice between different people who have a competing claim to receive the lump sum, and sometimes will even split the lump sum to reflect this.

One tricky scenario – and I am not for a moment suggesting that this is relevant in your case – is where the person who died had other relationships and/or other children. 

In this case the trustees have to be particularly careful not to disclose any confidential information and may simply be unable to explain to someone who did not benefit as they expected why this was the case.

In summary, if the only potential payout was a scheme pension (albeit rolled up into a single lump sum payment in this case), and the scheme rules did not provide for divorcees to benefit, then unfortunately you would not be entitled. 

But if there was a discretionary lump sum then you should certainly be making the case to the trustees that you had the strongest case to receive it.

If your late ex-husband’s scheme knew that you were divorced and still told you that you would benefit then it is very worrying if that information turned out to be incorrect. 

You could complain to the scheme and ultimately to the Pensions Ombudsman, though the most you could expect to get would be compensation for ‘distress and inconvenience’. 

Unfortunately, the Ombudsman could not force the scheme to pay a pension in breach of scheme rules.

For anyone else in a potentially similar situation, the most important things to do are:

– To make sure that ‘expression of wishes’ forms reflect your latest preferences about where any discretionary payments should be made; this should be done for any pension scheme of which you were a member, as well as for life insurance and similar policies;

– To check pension scheme rules to see if survivor pensions are still paid only to spouses (and civil partners) or whether the scope has now been extended; if it has not, the member could approach the scheme trustees and ask for this to be reviewed.

Ask Steve Webb a pension question

Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.

He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.

Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.

If you would like to ask Steve a question about pensions, please email him at [email protected].

Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.

Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.

If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.

Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.  

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