Playing cupid
Whenever I’m asked what piece of financial advice, I’m most proud of, my answer is, “I told someone to get married”, and then I recite this story.
I remember being referred to an unmarried couple where the ‘husband’ was approaching retirement. He’d worked for over 30 years at a very large well-known organisation. As a member of their final salary pension scheme, he was looking forward to enjoying a good and secure pension.
We considered his other assets and I explained that from an investment and estate planning point of view there was little that I could improve for him. However, I said, “the best advice I can give you is to get married!”
After his ‘wife’ had guffawed very loudly, I suggested that he checked the definition of ‘spouse’ on his employer’s pension scheme before he retired.
I explained that the definition of spouse in some old pension schemes usually refers to the person that you are married to at the time of death. If they continued as a partnership then, were he to die, his partner potentially wouldn’t be entitled to the spouse’s pension, which over time would have amounted to a great deal of money.
There were also advantages under Estate Planning as well, lessening potential IHT by up to £130,000.
When it makes sound financial sense to get married
It’s not only the definition of a spouse contained in some early pension schemes where it makes sound financial sense to get married.
Heterosexual couples in civil partnerships have no standing in pensions or tax planning. In fact, they have very little standing when compared with married or same sex civil partnerships, which is bizarre but remains the situation. There were moves to change this through Parliament, but something beginning with B got in the way!
Happy ever after
One usually thinks of a wedding costing a lot of money, but the reverse was so with the couple I was referred to. So, I wasn’t surprised that soon after I’d suggested wedding bells, I heard they’d got married very quietly at a local Registry Office!
I’m delighted that I encouraged them to check their pension scheme rules before he retired such that any appropriate actions could be taken in a timely manner.
I like to think of this bit of free advice as my generous wedding gift to them!
If you are one of the lucky ones in an old-fashioned final salary pension scheme, I highly recommend you check the definition of spouse, too.
If you have a question about your pension scheme, please call Chris on 01372 275098 or send an email.