We may think of our pension as our nest egg for retirement, but we may not see it as a form of insurance to protect our dependents.
No one likes to think that we might die before our children are grown, but the possibility exists. While we may have insurance in place and a named guardian in a will, the survivor’s pension is also within your pension. This survivor’s pension could provide your spouse and your children with financial support.
Your spouse would receive the survivor’s pension for life, which could be an essential asset when bringing up children.
If your children are under 23 years old and still in education, or they are incapacitated and financially dependent on you throughout life, they will qualify for a pension. The pension amount is calculated from the value stored in your pension fund at the time of your death. If you die while in service, the amount paid will be enhanced.
What does all this mean?
When thinking about providing for your dependents, you might want to consider the value of your pension in this calculation. It is something that might influence your decision when weighing up paying in more to your pension. The potential peace of mind it might offer is something worth considering.
When assessing the value of your pension to your dependents in the event of your death, you may wish to speak to an independent financial advisor.
The content in this article was correct on 29th November 2021. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on your teachers’ pension scheme, as well as financial matters in general. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.