Death is a Risky Business

WARNING: THIS IS NOT FINANCIAL ADVICE . Whilst terms such as ‘you’ and ‘yours’ may be used there is no malovolent intention of swaying, persuading, selling, referring or advising.

It is with certainty that you will die – when you die is uncertain, however!

I know that this may not make you feel better but unlike most guidance on defined benefit pensions and transfers your death is certain (and there will be no retrospective regulatory review).

We could even say in the vast uncertainty of life and anything associated with living that death is the only evenual certainty.

Therefore, much more than a cursory glance of the death benefits offered by a scheme are necessary.

Abridged Pension Transfer Advice – Risk of Death

Defined benefit pensions often pay 50% or so to any surviving spouse/civil partner (and even dependents sometimes).

If you’re unmarried (or lacking a civil partnership contract) this is pretty irrelevant; but if you do have another ‘half ‘thoughtful consideration should be given to their financial well being, shouldn’t it?

Once a pension transfer or conversion has taken place and funds are in a ‘flexi access’ pension (or variation of) the provision for your spouse/civil partner (or dependents) or other nominated beneficiaries will be what’s left in the pension.

There’s not changing of the mind or going back.

As such, if you die relatively early on, a bigger pot will be available to those you elect as beneficiaries of your remainder pot.

On the other hand, if you live a long time (and hopefully you do and joyously so at that) there may be less.

Considerations include the level of income taken, investment returns, accumulated costs and even the potential need for long term health care provision.

Another further risk, often overlooked, is the longevity factor (more on this below).

None of us are able to forecast the point of our death yet there’s always a chance of a very very long life, perhaps beyond 100 years. The obvious risk (if a transfer or conversion is instigated) is that funds are depleted by that ripe old age. 

In contrast, the benefits from a defined benefit pension will be paid for as long as you live.

So, no need to fret if you’re 102 and getting worried that the funds may run out!

Abridged Pension Transfer Advice – Risk of Death and Longevity Risk

As touched on above longevity risk is much more important if you give up any guarantees of a guaranteed pension income.

On a pure ‘stats’ level life expectancy is generally rising which is a good thing.

There are huge discrepencies, however.

Living in a polluted part of the country and/or living an unhealthy lifestyle (being overweight, drinking, argueing, getting angry too much, worrying about viruses etc) may shorten your lifespan.

If you enjoy life at a relaxed pace and look after yourself (in a health sense) then longevity risk can come into play.

Our past experiences, health and the history of our relatives, especially the ages of death of our parents/grand parents/great grand parents also shape our attitudes and expectations of longevity.

In  a nutshell, a full appraisal of death benefits and careful evaluation of their worth is of utmost importance.

Your life, expectations, experiences, preferences, needs and wishes for those you care for are unique to you.

Search within for your answers.

Abridge Pension Transfer Advice – Death Alternatives

Taking life insurance to cover your death may be a viable alternative to the death benefits available within an existing scheme.

The cost of such insurance will be shaped by your current age, postcode, lifestyle, level etc.

And an important point will be the affordability of such cover and in respect of death there’s not cheating by taking some type of level cover!

Often used as an alterntive in a comparison sense but if the stats were available I’m sure we’d find very few policies (for life) are taken out once a transfer has taken place.

 

Abridged Pension Transfer Advice –  a poem of inspiration, comfort and warmth.

 

If we are fortunate,
we are given a warning.

If not,
there is only the sudden horror,
the wrench of being torn apart;
of being reminded
that nothing is permanent,
not even the ones we love,
the ones our lives revolve around.

Life is a fragile affair.
We are all dancing
on the edge of a precipice,
a dizzying cliff so high
we can’t see the bottom.

One by one,
we lose those we love most
into the dark ravine.

So we must cherish them
without reservation.
Now.
Today.
This minute.
We will lose them
or they will lose us
someday.
This is certain.
There is no time for bickering.
And their loss
will leave a great pit in our hearts;
a pit we struggle to avoid
during the day
and fall into at night.

Some,
unable to accept this loss,
unable to determine
the worth of life without them,
jump into that black pit
spiritually or physically,
hoping to find them there.

And some survive
the shock,
the denial,
the horror,
the bargaining,
the barren, empty aching,
the unanswered prayers,
the sleepless nights
when their breath is crushed
under the weight of silence
and all that it means.

Somehow, some survive all that and,
like a flower opening after a storm,
they slowly begin to remember
the one they lost
in a different way…

The laughter,
the irrepressible spirit,
the generous heart,
the way their smile made them feel,
the encouragement they gave
even as their own dreams were dying.

And in time, they fill the pit
with other memories
the only memories that really matter.

We will still cry.
We will always cry.
But with loving reflection
more than hopeless longing.

And that is how we survive.
That is how the story should end.
That is how they would want it to be.

Poet: Mark Rickerby – Mark Rickerby on Strikingly (mystrikingly.com)

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