Pension planning is not top of the conversation list for couples – and as a result three out of four over 75s have made no financial provisions for their partners.
In contrast, nearly half of those aged 45 to 54 years old approaching retirement have agreed a financial plan for each other.
But this still leaves one in four couples with a partner with no pension, says pension provider Aegon, which asked older retirement savers about their financial plans for the surviving partner after their deaths.
The research revealed that men are more likely to consider their partner’s retirement finances, with almost half making provision for their partners, while less than a third of women do so for their partners.
Worrying trend
Aegon also found that many couples were unaware that new state pension rules did not allow payments to a surviving spouse, which potentially could leave them short of cash in retirement.
Kate Smith, head of pensions at Aegon said: “The majority of those aged over 75 have pension provisions for a spouse because it was common practice in defined benefit schemes, meaning this generation didn’t have to make a conscious decision.
“Historically, company defined benefit and state pension payments would continue to a partner on the death of the individual. However, with the shift away from defined benefit and with changes to state pensions mean a partner will no longer receive a survivor pension, these findings suggesting younger and future generations of retirees are less likely to provide for their spouse are worrying.
“The current generation of defined contribution savers have to plan their pensions together more than previous generations.”
Planning together
Smith explained that drawdown under new pension freedom rules allow partners to inherit unused pension funds and that retirement savers should check their pension terms to make sure they do not lose their funds if they die.
Older pensions may not pay any amount on death, while others will only return contributions paid to date.
“The closer you get to retirement the more you need to begin to plan your retirement finances in tandem,” said Smith.
“One of the main benefits of reviewing your retirement plans as a couple, is to ensure that should something happen to you, your partner will be provided for and won’t end up reliant on a less than generous state pension.”
