Give your children financial security if something happens to you
Important things to remember
- Make sure your family has a strong safety net
- You can make contributions to your pension yourself during maternity leave
- Have you considered setting up a children's pension?
Why are your children important in terms of your pension scheme?
Having children comes with many joys – and fixed costs. But what if something serious happens to you? Could you and your family still afford food, a place to live, holidays, hobbies, confirmation, boarding school and everything else?
If you have a pension scheme, you can extend a safety net under your family’s personal finances. A scheme includes insurance policies that cover difficult situations. You can increase or decrease the insurance cover during your lifetime, so you can choose to have better cover while you have dependent children living at home.
What happens to your pension scheme while you are on maternity leave?
If you are on paid maternity leave, contributions to your pension will generally continue. However, if you are on unpaid maternity leave, no contributions will normally be made to your pension during this period. Your maternity leave may therefore mean that you end up receiving a lower pension, unless you make extra contributions during or after your maternity leave.
The insurance cover under your pension scheme generally continues unchanged while you are on maternity leave.
Can your family afford everyday life if you become ill or die?
Have you thought about whether your family’s budget will be sustainable if you become too ill to work or, in the worst case, die?
If not, you could consider increasing your insurance cover if you become too ill to work or die. This gives you and your immediate family a stronger financial safety net.
Have you considered setting up a children's pension?
You can give your children a financially secure upbringing, even if you die before they reach adulthood. If you have a children's pension, your children will receive a monthly payout after your death until they turn 18, 21 or 24.
Until a child reaches the age of 18, the surviving parent (or guardian) will receive payouts. This money can help support your children.
Who will receive your pension, when you die?
If you have pension savings and/or insurance that will be paid out on your death, it is generally
your next of kinWho are your next of kin?
If your pension scheme was set up in 2008 or later, your next of kin are (in order):
- Spouse or civil partner
- Cohabiting partner who has either lived with you for two years or with whom you have children
- Heirs apparent, i.e. children, grandchildren, etc.
- Heirs under a will
- Other heirs
If your scheme was set up in 2007 or earlier, your cohabiting partner is not eligible. In other words, your children/heirs will receive payouts if you do not have a spouse/civil partner.
If you want people other than your next of kin to receive the money, you can add one or more special beneficiaries on your pension scheme.
You are always entitled to give preferential treatment to your (divorced) spouse, your issue (children, grandchildren, etc.), stepchildren and your cohabiting partner. You can include who you want to on certain types of insurance. You can set up beneficiaries by writing to AP Pension.
If you have included a named beneficiary, you can change your decision at a later date if you no longer think that the beneficiary should receive a payout. You can write to AP Pension in this case too.
who will receive the payout.
If you want others to have the money, you must enter them as beneficiaries in your pension scheme.
If your pension scheme was set up in 2008 or later, next of kin (in order) are:
- Spouse or civil partner
- Cohabiting partner who has either lived with you for two years or with whom you have children*
- Heirs apparent, i.e. children, grandchildren, etc.
- Heirs under a will
- Other heirs.
Rules on succession
According to the rules on succession, your estate will be distributed as follows if you have not made a will:
If you are married/have a civil partner but no children, your spouse/civil partner will inherit your entire estate.
If you are married/have a civil partner and children, your spouse/civil partner will inherit half your estate and your children will inherit the other half to be divided among them. If a child does not survive you, your child's children will inherit. Spouses with co-ownership have the right to remain in undivided property with joint children.
If you are unmarried/do not have a civil partner but have children, your children will inherit everything.
If you are unmarried/do not have a civil partner or children, your parents will inherit everything to be divided between them. If one or both parents are dead, their children inherit the deceased parent's share. If a sibling does not survive you, the siblings’ children (your nephews and nieces) will inherit.
If you want your estate to be distributed differently, you need to make a will.
Can cohabiting partners protect each other?
Yes, by:
- making an ordinary will or an extended joint will, allowing them to inherit as if they were spouses.
- being designated “Next of kin” if set up after January 1, 2008.
*If your scheme was set up in 2007 or earlier, your cohabiting partner is not eligible. In other words, your children/heirs will receive payouts if you do not have a spouse/civil partner.