I Am My Father’s Only Living Relative. Can I Collect His Pension?
Provided by HG.org
When a person has worked for a company for a requisite number of years, he or she may be eligible for a pension. However, the employee may sometimes die before he or she receives the pension or before receiving the entire amount of the pension. This leaves open the question what happens to the pension when an employee dies. In some situations, an adult child may receive the remainder of the pension.
A pension gives an employee a set amount of income after he or she retires and is not working. Pensions are typically paid to the employee in the form of a monthly payment. The longer a person works, the more he or she may receive from the pension. If a person dies before he or she reaches retirement age, the money may be able to pass to the employee’s beneficiaries or heirs.
Type of Pension
How a pension is treated may depend on the specific type of pension plan in place. The employee may have elected a certain type of pension or plan that allows a surviving spouse or other person receive the remainder of the pension. The type of pension may also dictate how the beneficiary receives the pension, such as in a lump sum, as an annuity or as a monthly payment. The age of the employee at the time of his or her death may also impact whether a beneficiary can receive all of the pension or any portion of it. The employee may have also had the option to provide a pension to a surviving spouse or other dependent based on the way he or she structures the pension plan.
Before a person may qualify for a pension, he or she must usually be vested in the pension plan. This means that the employee has to work the requisite number of years before being entitled to the full percentage of the pension benefits. For example, the employee may be required to work five years, ten years or twenty years before becoming eligible for the pension. Once the employee has worked this amount of time, he or she is considered to be fully vested. If the employee dies, then his or her beneficiaries or heirs may be entitled to the pension benefits if the employee dies before retiring.
It may be possible to be partially vested in the pension. For example, the employer might require the employee to be employed for ten years before being fully vested but may consider the employee entitled to 20 percent of the benefits after two years and 40 percent of the benefits after the second year. If the employee dies before becoming fully vested, his or her beneficiaries or heirs may receive the amount of benefits that have vested.
When a person establishes a pension plan, he or she may be asked to designate a beneficiary. This is the individual or individuals who will receive the pension in the percentages allocated to them by the employee. The employee can designate one person to be the beneficiary or multiple beneficiaries for whom the employee determines a specific percentage. For example, an employee may decide to give one-third of a pension to a surviving spouse and two-thirds for his or her surviving dependents.
If a spouse is not named as a beneficiary, state law or the pension plan may require the spouse to sign a waiver. Alternatively, a person can name a primary beneficiary and a secondary beneficiary. If the primary beneficiary survives the employee, he or she is entitled to his or her share of the pension. However, if the primary beneficiary dies before the employee, then the secondary beneficiary receives the pension benefits.
Lack of Beneficiary Designation
If the employee failed to list a beneficiary or if the beneficiary listed predeceases the employee, the pension can be distributed according to the rules of the pension plan. Based on the language in the pension plan, the pension may go automatically to the spouse. If the employee is not married at the time of his or her death, it may go to the children or the employee’s next of kin. In other situations, the pension may become part of the estate that is distributed according to the terms of the will. If there is no will, the proceeds may be distributed based on the state’s laws of intestacy, which are the set of rules that determine how the property is distributed based on the degree of relationship to the decedent.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.