We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Should I Consider When Choosing a Pension Beneficiary?

Gerelyn Terzo
By
Updated: May 17, 2024
Views: 5,299
Share

People often spend many years of their lives saving for retirement. When the time comes, many retirees depend on the income provided from a pension plan, which is a type of retirement fund. In the event that a person dies before the retirement benefits are depleted, the money can be distributed to a pension beneficiary. To select this recipient, one may consider a host of factors including a person's age, their relationship to the retiree, as well as their ability to responsibly manage money.

Pensions have different laws that dictate the way that assets must be handled. Oversight differs based on regulation in a country or even by the employer or plan administrator. Although some of the advantages associated with a pension might be lost of a plan member dies, such as health benefits, an heir is likely to be assured income for a period of time.

Married individuals are likely to have fewer choices in comparison with a single person. A husband or wife may be required to leave the payout to a spouse. If that partner legally agrees to surrender rights to benefits, however, the decision could leave the plan member with more flexibility on who to name as a pension beneficiary. Also, if a partner dies before the pension plan member, the need for a spouse's approval becomes irrelevant. When given the option, consider naming a secondary recipient of benefits so that if the primary heir passes away your money is handled in a way that is acceptable to you.

If the child of a retiree is named as a pension beneficiary, he or she may not be entitled to the money before reaching a minimum age. You may hire a trustee to oversee and protect the benefits until the child becomes old enough for the distributions. Also consider a young person's maturity and ability to manage large sums of money before naming a pension beneficiary.

When retirement funds are distributed in one lump sum versus monthly payments there are generally harsh tax implications. There may be ways to lessen the severity of taxation for whomever is named as a recipient. One such tactic could be to postpone federal charges. This may be accomplished by delaying access to the money, instead directing benefits into a separate individual retirement account, for example. Before naming a pension beneficiary, you may want to consider the responsible nature of the intended recipient.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Gerelyn Terzo
By Gerelyn Terzo
Gerelyn Terzo, a journalist with over 20 years of experience, brings her expertise to her writing. With a background in Mass Communication/Media Studies, she crafts compelling content for multiple publications, showcasing her deep understanding of various industries and her ability to effectively communicate complex topics to target audiences.

Editors' Picks

Discussion Comments
Gerelyn Terzo
Gerelyn Terzo
Gerelyn Terzo, a journalist with over 20 years of experience, brings her expertise to her writing. With a background in...
Learn more
Share
https://www.wisegeek.net/what-should-i-consider-when-choosing-a-pension-beneficiary.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.