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Couples' pension arrangements 'inadequate'

Couples' pension arrangements 'inadequate'

Category: Retirement

Updated: 01/11/2013
First Published: 01/11/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

More than half of couples over the age of 40 risk leaving one partner with no income should the other die, with just 46% having made arrangements to ensure the surviving partner continues to receive an income.

According to the research by Prudential, women are most at risk with one in five (or 21%) planning to rely entirely on their other half's pension income in retirement, whilst overall 13% of couples will have one partner financially dependent on the other.

The study highlighted the need for couples to plan ahead and have frank discussions about their retirement, with more than half having failed to make suitable arrangements.

In fact, 28% have never discussed how one partner's death would impact pension arrangements whilst 41% have yet to decide what they'll actually do with their pension savings to generate an income, and of those that have made a plan only 10% are expecting to purchase a joint life annuity – where the surviving partner will continue to receive an income on the death of the annuitant.

This has worrying implications for the surviving partner as they risk being left without any form of income, which is why industry experts are urging couples to plan ahead to remain financially solvent.

Vince Smith-Hughes, head of business development and retirement expert at Prudential, said:

"For couples looking to enjoy a comfortable retirement, organising and agreeing their income options should be a priority – long-term financial planning can be even more important than managing day-to-day-finances.

"Our research shows that even those couples who have discussed their retirement finances have still made decisions that could leave one of them without an income if they outlived their partner.

"Having open and frequent conversations as a couple about your retirement planning is definitely an important first step. However, making the right decisions on the best retirement income options – including what happens when one partner dies – can be daunting. That's why seeking advice from a retirement specialist or financial adviser is just as important."

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