Pension for wife of former employee

Discussion in 'Pensions' started by Purple, Mar 15, 2017.

  1. Purple

    Purple Frequent Poster

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    A long term employee died recently leaving his widow with no pension.
    The company wants to set up a pension for her. What's the best way of doing so?
     
  2. Brendan Burgess

    Brendan Burgess Founder

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    An interesting question.

    I presume you know that she is entitled to the Widow's Pension, irrespective of her age?

    The easiest would be for the company simply to add her to the payroll. Depending on her age, this would be subject to Employers PRSI, so it would be expensive. Could there be a role for her in the company?

    You could buy an annuity for her from one of the life insurance companies. But these are expensive because interest rates are so low.

    You might also be able to make her a one-off ex-gratia payment which would presumably be tax-free up to a certain amount. Not sure how you could do this, but it's worth investigating.

    You could do a combination of the above.

    There is a real danger that the survivor of any employee could make a claim in the future on the basis that it is established practice. You should also take advice from an employment lawyer on this to make sure that you do not create a precedent.

    Brendan
     
  3. Purple

    Purple Frequent Poster

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    Thanks Brendan.
    We know that she's entitled to the Widows Pension but she expected more and the fact that she was not a beneficiary of his pension came as a shock to her.
    There would be no role for her here as she is quite elderly and we won't be telling anyone about it so there will be no issue of setting a precedent.
    An annuity or a gift look like the best options.
     
  4. jjm2016

    jjm2016 Frequent Poster

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    Last edited: Mar 15, 2017
    One thing the company should have if they do not have it already is a life policy to cover all employees death in service this will pay our Up to 4 times there wages tax free cost are low can be offset against profits you can .to buy an income of 4000 euro cost around 100000 if you go for an annunty.Ex-Gratia may work tax wise for both but i think there is a time limit
     
    Last edited: Mar 15, 2017
  5. Purple

    Purple Frequent Poster

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    Thanks jjm but the employee was actually retired when he died. I should have said that in my first post. He was retired but working part time as a kind of consultant. We offer that for retiring employees so that they don't lose contact with their colleagues and we still have access to their lifetime of knowledge.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    If you have a pension fund in the company, would the Trust Deed allow the trustees to make an exception and pay her a pension?

    Brendan
     
  7. jjm2016

    jjm2016 Frequent Poster

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    Purple off topic but related .Was he getting an pension annuity which did not have a built in clause stating wife gets 50% if she lived longer than him.Just for the record if he went for the pension to die with him it would cost around 100000 to buy 4000 yearly pension .he could have got about 3800 per year and it would have given his widow half of 3800 for the rest of her life .When he retired did the pension providers give him advice.The fact he was still employed as a consultant when he died may be important information.
     
  8. Purple

    Purple Frequent Poster

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    We don't have a pension fund.
     
  9. Purple

    Purple Frequent Poster

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    He removed her from the fund in order to reduce his payments. It was a personal fund, not run through the company group scheme. It was a really stupid thing to do.