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. If a long call is owned on the record date of a stock, is the owner of the option ...

    Learn how holding a long call option does not entitle the holder to a dividend on the underlying stock unless the call is ...
  2. How can an investor profit from the cyclical nature of the electronics sector?

    Learn how sector rotation and clever options strategies, such as the long straddle, help investors profit from the cyclical ...
  3. What does negative vega mean for credit spreads?

    Learn about the option Greek vega, credit spreads and how vega affects the values of option credit spreads when volatility ...
  4. What options strategies are best suited for investing in the banking sector?

    Learn how shrewd investors employ the covered call options strategy to capitalize on the banking sector's reputation for ...
RELATED TERMS
  1. Exchange Traded Derivative

    A financial instrument whose value is based on the value of another ...
  2. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  3. Benefits Payable Exclusion

    An insurance policy exclusion that removes the insurer’s responsibility ...
  4. Catastrophe Equity Put (CatEPut)

    Catastrophe equity puts are used to ensure that insurance companies ...
  5. Open Trade Equity (OTE)

    Open trade equity (OTE) is the equity in an open futures contract.
  6. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...

You May Also Like

Related Articles
  1. Retirement

    Top 10 Stocks for Retirement Portfolios

  2. Options & Futures

    Why Is Best Buy Stock So Volatile?

  3. Trading Strategies

    A Guide Of Option Trading Strategies ...

  4. Options & Futures

    Options and Roth IRAs: Do's and Don'ts

  5. Options & Futures

    Trade Covered Calls On High Dividend ...

Trading Center