Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
can pension start after worker has died?
Old 05-10-2016, 05:33 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,366
can pension start after worker has died?

My attorney says that if a worker dies before starting to collect his/her vested pension, the spouse will not be able to collect survivor benefits. Consequently he recommends that if the worker is ill or injured and not expected to survive, the spouse, via power of attorney, should initiate the worker's pension, so that he/she will later be able to collect the spousal benefits.

That sounds odd to me. Online info, though hazy about this situation, suggests ERISA instead requires the spouse of a deceased worker be allowed to initiate a pension's payout (in the form of spousal benefit) after that worker has died. I have not seen this issue discussed here before. Does anyone have experience with it?
__________________

__________________
GrayHare is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-10-2016, 05:37 PM   #2
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,059
My pension, if I have not yet collected, has a lump sum death benefit. If I had a survivor option selected, the survivor would get their share.
__________________

__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 05-10-2016, 05:39 PM   #3
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
did the participant terminate employment before 1984?

if not, get a new attorney

google "QPSA" and/or "REA death benefit"
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 05-10-2016, 05:48 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Refer to the "plan documents" for your particular plan. With ours, if the plan participant dies before beginning the pension, the spouse collects the survivors benefit. For us, the default survivors benefit is 50%.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 05-10-2016, 05:51 PM   #5
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
Quote:
Originally Posted by youbet View Post
Refer to the "plan documents" for your particular plan. With ours, if the plan participant dies before beginning the pension, the spouse collects the survivors benefit. For us, the default survivors benefit is 50%.
the plan documents or the SPD would be very specific on this issue
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 05-10-2016, 06:30 PM   #6
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 704
All I know is that my pension has a survivor benefit once you are vested in the pension plan (5 years), and you haven't started benefits. I have no idea what the benefit is as it isn't an issue for us. As others have said, check the plan to see how it would be handled. You may have to ask to get specifics.
__________________
akck is offline   Reply With Quote
Old 05-10-2016, 06:36 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,366
Advice to "check the plan" says to me the law does not require a pension plan, in the scenario we're discussing, to pay a surviving spouse any benefits.
__________________
GrayHare is online now   Reply With Quote
Old 05-10-2016, 06:43 PM   #8
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 704
Here's what my plan would have done had I died before retiring:

PERS Employee Death Benefits | Alaska Division of Retirement and Benefits
__________________
akck is offline   Reply With Quote
Old 05-10-2016, 06:56 PM   #9
Full time employment: Posting here.
jjquantz's Avatar
 
Join Date: Jan 2014
Location: Northern Virginia
Posts: 848
In my plan, DW would have gotten a lump sum death benefit if I had kicked the bucket before starting the monthly checks. The lump sum was very small compared to the present value of the monthly payment stream. This was an important factor (although not the only one) in starting to collect as soon as possible.
__________________
jjquantz is offline   Reply With Quote
Old 05-10-2016, 07:04 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,450
No disrespect, but your lawyer is an idiot. Agree with others... check you plan documents.

My plan says:
Quote:
If you die prior to beginning to receive benefit payments, the Plan provides a preretirement death benefit equal to the value of your vested pension benefit. ....If you are survived by your spouse... your spouse will be entitled to a preretirement survivor annuity benefit. .... If you do not have a surviving spouse.... the value of your vested pension benefit ... will be paid to your designated beneficiary.
But I think my plan is typical based on the following I found on the web.

Quote:
When you enroll in your employer’s pension plan, you designate a beneficiary to receive your pension should you die before you’re able to collect the money. You can designate a single beneficiary or multiple beneficiaries and you can designate the percentage of your pension that each beneficiary will receive. For instance, if you have a spouse and two children listed as your beneficiaries, you might give 50 percent of the pension to your spouse and 25 percent to each of the children. If you’re married and you choose a beneficiary other than your spouse, most plans require your spouse to sign a waiver verifying agreement to this arrangement. You might also need to designate a secondary beneficiary. The secondary beneficiary receives the money if your primary beneficiary precedes you in death. Update your beneficiary form every few years to reflect any changing circumstances in your life, such as a divorce or the birth of children.
What Happens to Your Pension if You Die Before You Retire? | Finance - Zacks

Quote:
If you have an old-fashioned defined benefit pension, your employer is required to offer a plan that leaves the surviving spouse with at least 50% of the deceased employee's pension.
Your Pension When the Unexpected Happens | Fox Business
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 05-10-2016, 07:29 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by GrayHare View Post
Advice to "check the plan" says to me the law does not require a pension plan, in the scenario we're discussing, to pay a surviving spouse any benefits.
Federal/State laws will trump any individual plan requirements. But it sure looks like the law (post 1984) defines a minimum of 50% to beneficiary in this case. My plan (and I think everyone who posted) says the same.

I'd be very concerned about your attorney. Seriously. Ask him/her to show you the relevant laws and sections of your specific plan that state this. Please share if it is different from the thinking here.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 05-10-2016, 09:23 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,366
I'll check into why the attorney thinks that way. What I've seen of the pension regs is that only "qualified" pension plans are required to pay spousal benefits in the scenario we're discussing, however I've not found exactly what makes a pension "qualified".

Digging through pension plan docs to determine benefits is a tough slog. They are not written to be clear, so I'm uncertain that after reading them that I'd feel confident I had a definitive answer about the scenario.
__________________
GrayHare is online now   Reply With Quote
Old 05-10-2016, 11:27 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,450
Your plan is most likely a qualified plan.

What is the difference between qualified and non-qualified plans? | Investopedia
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
can pension start after worker has died?
Old 05-11-2016, 02:03 AM   #14
Recycles dryer sheets
robertf57's Avatar
 
Join Date: Jun 2014
Posts: 329
can pension start after worker has died?

Lot of speculation and accusations against your attorney in this thread that I personally think are unfounded:

1) Many government pensions will not be covered by ERISA, so right off the bat an a priori assumption that ERISA applies is presumptuous.
2) Many pensions ( including mine) would pay out the vested balance of the plan to my spouse ( which is considerably less than the value of the annuity payments we would expect her to receive if I had retired ( because of the interest rate guaranteed in the annuity).


Look at the plan documents, perhaps with you attorney for the real story. Don't blindly accept the rantings of us well intentioned but sometimes misinformed Internet "experts"



Sent from my iPad using Early Retirement Forum
__________________
robertf57 is offline   Reply With Quote
Old 05-11-2016, 02:24 AM   #15
Recycles dryer sheets
 
Join Date: Sep 2011
Location: Placerville
Posts: 300
Where I worked and retired from, it was easy to put in retirement papers before surgery or other life-threatening activity. (Some guys did it for hunting trips and 'adventure' vacations) The paperwork takes 90 days to go through. By that time, the danger has passed or the applicant has passed. If the danger has passed, the retirement papers are cancelled. If not, then it's a 'dead man's switch' and is good as of the date submitted.

Also, we had a 24/7 phone # we were told to give to our spouses to call if we died or were gravely injured or ill. The spouse would call and someone at work would immediately apply for the person's retirement. The HR department made sure to inform to call them first, before a time-of-death was recorded.

The death benefits were no where near what a pension would be.
__________________
skipro33 is offline   Reply With Quote
Old 05-11-2016, 05:54 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,708
Just last week it was reported that here in Mass, about $690,000 in pensions were being paid to dead State workers. Some of them still vote too!

Here's the story
Audit: Massachusetts Retirement Board pays $687,000 to dead pensioners | masslive.com
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 05-11-2016, 07:31 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,450
Quote:
Originally Posted by robertf57 View Post
Lot of speculation and accusations against your attorney in this thread that I personally think are unfounded:

1) Many government pensions will not be covered by ERISA, so right off the bat an a priori assumption that ERISA applies is presumptuous.
2) Many pensions ( including mine) would pay out the vested balance of the plan to my spouse ( which is considerably less than the value of the annuity payments we would expect her to receive if I had retired ( because of the interest rate guaranteed in the annuity).


Look at the plan documents, perhaps with you attorney for the real story. Don't blindly accept the rantings of us well intentioned but sometimes misinformed Internet "experts" ....
While I disagree with the first part (the OP said the lawyer told him "the spouse will not be able to collect survivor benefits") and we can agree to disagree on that, I agree with the second part... the devil is in the details and the plan should provide clarity on the survivorship benefits.

IMO the lawyer's assertion was careless at best unless the OP's plan is unusual and the lawyer had reviewed it and knew that it was unusual but I suspect the lawyer was shooting from the hip.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 05-11-2016, 07:57 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,646
When my brother was dying of cancer he didn't want to retire assuming my S-I-L could choose between the survivor annuity and his lump sum. Luckily she read the documents and discovered that once he died her choice would be between 50% of his annuity and 50% of his lump sum. He quickly retired and took the full lump sum which passed to S-I-L. Lots of gotchas in these programs.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 05-11-2016, 08:35 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by GrayHare View Post
I'll check into why the attorney thinks that way. What I've seen of the pension regs is that only "qualified" pension plans are required to pay spousal benefits in the scenario we're discussing, however I've not found exactly what makes a pension "qualified".

Digging through pension plan docs to determine benefits is a tough slog. They are not written to be clear, so I'm uncertain that after reading them that I'd feel confident I had a definitive answer about the scenario.
Your HR department should be able to answer all these questions directly, and point you to the relevant sections of the documentation. The survivor benefits for my pension are spelled out in plain English in our benefits handbook, no legal assessment required.

Knowing if it is a qualified plan or not is essential information (and I think it was assumed by most/all of us) - does your lawyer know this?

edit/add: to robertf57 - I don't think anyone in this thread suggested the OP should 'blindly accept' any of the info provided. People shared what their plans allowed, for reference, and mostly told OP to check their plan directly for the info - same as you did.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 05-11-2016, 08:44 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by skipro33 View Post
Where I worked and retired from, it was easy to put in retirement papers before surgery or other life-threatening activity. (Some guys did it for hunting trips and 'adventure' vacations) The paperwork takes 90 days to go through. By that time, the danger has passed or the applicant has passed. If the danger has passed, the retirement papers are cancelled. If not, then it's a 'dead man's switch' and is good as of the date submitted.

Also, we had a 24/7 phone # we were told to give to our spouses to call if we died or were gravely injured or ill. The spouse would call and someone at work would immediately apply for the person's retirement. The HR department made sure to inform to call them first, before a time-of-death was recorded.

The death benefits were no where near what a pension would be.
What kind of pension was this? It seems typical here that the surviving spouse receives a default 50% of pension regardless of the timing of the death.

-ERD50
__________________

__________________
ERD50 is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Joan Rivers has died Meadbh Other topics 29 09-07-2014 07:44 PM
Robin Williams has died Meadbh Other topics 61 08-15-2014 06:10 AM
Jean Harris, Murderer of Dr Herman Tarnower, Has Died haha Other topics 0 01-03-2013 12:54 PM
Charles Fawcett Died: I Just Realized How Boring My Life Has Been poboy Other topics 5 02-11-2008 07:45 AM

 

 
All times are GMT -6. The time now is 01:07 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.