Query re: Wording on Work Pension

jos_kel

Was just looking at the BBC small print on my work pension. See below wording.

Seems a bit strange that the Trustees would have total discretion in selecting recipients of the lump sum Death in Service Benefit.

Surely the recipients would be as directed by me without question.

Am I interpreting the following wording correctly?

* Although the Trustees have total discretion in selecting recipients of the lump sum Death in Service Benefit, they can best exercise their discretion if they know your wishes. You are invited to indicate your wishes by completing an Expression of Wish form.

CramCycle

Basically it says if you don't tell them then it's your fault if it goes to the wrong person (s).

fritzelly

If you don't tell them who to pay then what would you expect them to do...wait for someone to make a claim

tom traubert

And, their obligation to abide by the provisions of the succession legislation of the relevant day is paramount also.

jos_kel

https://www.boards.ie/discussion/comment/121855078#Comment_121855078

I get that but it still says they have total discretion.

And it says that if I express my wishes it will better guide them in expressing their discretion.

To me the wording seems to indicate that my wishes would not be guaranteed but the trustees would still have total discretion.

Seems a bit ambiguous.

Peregrinus

It's fairly standard to give the trustees the final say.

The reason is a pragmatic one. It's not uncommon for someone new to the job to fill out the nomination form on day 1 and never look at it again. 22 years later, they die unexpectedly and the nomination form is pulled out of the file and opened. It turns out they nominated their parents, who at the time were their nearest relatives. But the parents have since died; if the death benefit is paid as per the nomination it will go to the next of kin of whichever of the parents was the last to die who might be, say, a second cousin in Massachussets. However in the course of the 22 years the worker married and he is survived by a grieving widow and four school-aged children.

The trustees are given a discretion so that, in circumstances like that, they will not be bound by the worker's clearly out-of-date nomination form, and can instead pay the benefit to the people who the worker would almost certainly have wanted and expected to receive it, if he could have been bothered to think about it.

If you review your nomination every couple of years and update it as your circumstances change, it's vanishingly unlikely that — should the occasion arise, which hopefully it won't — the trustees will override it. Another option is to nominate the executor of your will, and then make provision in your will for where you want the death benefit to go. The trustees are very unlikely to override a nomination in favour of your executor.

jos_kel

https://www.boards.ie/discussion/comment/121855474#Comment_121855474

Thanks so much for that explanation

coylemj

I'd agree with most of what Peregrinus said above but, having done pension trustee training, I'd disagree with his opinion that: 'The trustees are very unlikely to override a nomination in favour of your executor.'

Because what the trustees will do is to take stock of the deceased's situation at the time of death and not when s/he made their last will or filled out the nomination form. Someone who is separated (but not divorced) from his wife and whose children are adults and well settled could get involved in a relationship, a pregnancy could result and, before the child is born, the father is killed or dies suddenly.

The trustees can't force anyone to make a will and if that fellow died intestate, his wife and children would inherit everything. Even if he had made a will, it's highly unlikely that it would have been made in anticipation of him fathering another child. And, regardless of what he said in his will, his wife would have been entitled to a mninum of one-third of his estate. Even if she was now in a new relationship and financially independent. While the mother of the unborn child could be in altogether less favourable circumstances.

It's because of the possibility of circumstances like that that the deeds of the scheme gives the trustees absolute discretion. It insulates the cash from the Death in Service benefit from the rules around succession and allows the trustees to make provision which they feel appropriate, notwithstanding what the deceased stated in his will or in the nomination form.

tom traubert

I stand corrected, and I suppose the post above illustrates the dangers of non professionals (me in this case) offering opinions in fora such as this.

Thank you @coylemj

Peregrinus

https://www.boards.ie/discussion/comment/121857750#Comment_121857750

I'm taking it for granted that nobody will make a nomination in favour of their executor unless they also make a will. That would be stupid.

The thing about a nomination in favour of the executor is that the trustees don't know what's in the will - they're not beneficiaries under the will; they have no right to find out what it says. So they can't exercise their discretion to override that nomination on the basis that whatever arrangement the testator made has been overtaken by events; they don't know what arrangement the testator had made, or whether he has kept it up to date in light of events.

There can be circumstances like those you outline in which, say, the surviving partner knows she is not a beneficiary under the will and makes an application to the trustees, and facts like that could lead the trustees to override the nomination, at least in part. But it would need to be fairly unusual facts.

(On the facts you outline an application could be made on behalf of the unborn child (if born alive) for a share in the deceased's estate, and I would think such an application would have a high chance of success.)