Can I leave my pension to my spouse when I pass away?

By Albert Phung AAA
A:

In most cases, an individual with a pension plan should have the option to leave at least a portion of his or her pension to a surviving spouse and/or child. Oftentimes, this can be done by purchasing an option on the pension plan. However, depending on the specifics and conditions mentioned in the plan, the cost in implementing such a measure will be in the form of reduced benefits for the surviving spouse.

One example would be a defined-benefit pension with joint and survivor options. In this case, the surviving spouse would be entitled to at least half of the benefits that were originally given to the couple. In a regular defined-benefit pension plan without options, benefits stop once the individual passes away, which means that benefit end sooner. The plan with joint and survivor options assumes that one member of the couple will survive; therefore, both types of pensions are designed to pay out a similar amount over time, which is why the monthly amount paid out on the pension with joint and survivor options is lower.

For related reading, see Pension Law Could Reduce Your Payout.

RELATED FAQS

  1. What is a volatility smile?

    Discover what options traders mean when they refer to a "volatility smile," and learn why a volatility smile's existence ...
  2. Is short selling ethical?

    Understand the concept and practice of short selling, and examine the ethical questions that some investors raise in regard ...
  3. What kinds of restrictions does the SEC put on short selling?

    Learn about the rules and regulations on short selling enforced by the U.S. Securities and Exchange Commission, or SEC, including ...
  4. When short selling, how long should you hold on to a short?

    Explore the reasons for short selling and the various factors that influence how long an investor may wish to maintain a ...
RELATED TERMS
  1. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  2. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  3. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  4. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all ...
  5. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  6. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...

You May Also Like

Related Articles
  1. Options & Futures

    Options -- Accessing Stakes In Apple ...

  2. Professionals

    Retirement Bliss? Not So fast: When ...

  3. Options & Futures

    These Are The Top Brokerage Firms For ...

  4. Options & Futures

    Apple As An Example Of How a Protective ...

  5. Options & Futures

    Apple As An Example Of How to Use a ...

Trading Center