What happens to the value of a pension plan if an employee dies before retirement?

Answer 1

In the US......

If it is a defined contribution plan (401(k), profit sharing etc.) the account goes to the spouse. If no spouse than the employees' estate.

If it a defined benefit or pension plan, most plans provide a survivorship benefit for the spouse which is about 50% of the benefit the employee was entitled to when he passed away. This is the minimum, some plans provide a larger benefit than this.

Answer 2

Really depends on the plan, because each plan is different. In general, most people select beneficiaries (like spouse or children) when enrolling in the plan, so half of the money earned (or in rare cases, the full amount) would go to them, though how that money is paid out depends. Sometimes there is also a death benefit paid to the beneficiaries. You should ask a financial planner to look at the pension plan documents. Check out http://www.plannerconnect.com that's where I found mine.

Answer 3

It probably depends on the terms of the pension agreement. Are there rights to any surviving spouse or children or other dependents? Do the other pensioners divide up what's in the fund? Do they divide it equally, or according to how much each one has contributed?

Answer 4

They take the amount that it was at the day of the death, then devide it among the beneficieries, if their are no heirs it will be paid to his nearest family, Eg: mother, father, brother sister, depending on who's still alive otherwise to his or her children, but the full amount of the plan wont be paid out.
Because he did not live to retirement age, so depending on what plan he was the amount can vary.

Answer 5

That depends on the pension plan.

Answer 6

John the Actuary is 100% correct....give the man the points!