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can pension start after worker has died?
05-10-2016, 04:33 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,906
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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?
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05-10-2016, 04:37 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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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.
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05-10-2016, 04:39 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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did the participant terminate employment before 1984?
if not, get a new attorney
google "QPSA" and/or "REA death benefit"
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You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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05-10-2016, 04:48 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,186
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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%.
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05-10-2016, 04:51 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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Quote:
Originally Posted by youbet
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%.
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the plan documents or the SPD would be very specific on this issue
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You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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05-10-2016, 05:30 PM
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#6
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 800
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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.
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05-10-2016, 05:36 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,906
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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.
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05-10-2016, 05:43 PM
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#8
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 800
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05-10-2016, 05:56 PM
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#9
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Full time employment: Posting here.
Join Date: Jan 2014
Location: Western Maryland
Posts: 926
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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.
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05-10-2016, 06:04 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,376
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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.
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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.
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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.
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Your Pension When the Unexpected Happens | Fox Business
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05-10-2016, 06:29 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,899
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Quote:
Originally Posted by GrayHare
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.
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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
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05-10-2016, 08:23 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,906
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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.
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05-10-2016, 10:27 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,376
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__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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can pension start after worker has died?
05-11-2016, 01:03 AM
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#14
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Recycles dryer sheets
Join Date: Jun 2014
Posts: 337
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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"
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05-11-2016, 01:24 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Sep 2011
Location: Placerville
Posts: 1,788
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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.
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05-11-2016, 04:54 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,421
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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
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05-11-2016, 06:31 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
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Quote:
Originally Posted by robertf57
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" ....
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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.
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If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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05-11-2016, 06:57 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,331
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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.
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05-11-2016, 07:35 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,899
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Quote:
Originally Posted by GrayHare
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.
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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
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05-11-2016, 07:44 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,899
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Quote:
Originally Posted by skipro33
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.
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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
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