Dealing with death
When a person retires, an annuity purchased for him or her is intended
to be paid throughout the lifetime of the pensioner. If the pensioner
dies prematurely, what can be done to protect surviving dependants?
Briefly, there are two options:
To incorporate a minimum guaranteed period of payment in the contract
for the annuity.
To set up an annuity on a "joint life" basis.
Generally, for a pension being set up on retirement, it is usual to put
in a minimum guaranteed period of payment. The most common guaranteed
period is 5 years, but a guarantee of up to 10 years is allowed. The
length of the guaranteed period will affect the overall cost of the
Joint Life Annuities
This is really the best way of ensuring that an income will continue to
be available for a dependant after the death of a pensioner. There is a
cost factor involved - and the actual cost will depend upon the age and
sex of dependant, compared to the age and sex of the pensioner. The
younger the surviving dependant, the more expensive the joint life
option will be. In general, life expectancy for women is higher than
that of man of the same age.
Widow / Widower's Pensions - Death-In-Service
If a pension is set up following the death of a pension scheme member in
the service of the employer, the Revenue Commissioners generally do not
allow any guaranteed period to be attached to the pension being set up
for the surviving spouse. However, this rule docs not apply in some
cases. For example, if there are dependant children, they may permit the
pension to be continued until the youngest child ceases to be dependent.
These are technical matters to be dealt with by pension scheme trustees.