Employer-based Super Schemes - Richard and Cath

Cath was widowed recently, when her husband Richard died at 75.

During retirement, Richard had received an annual pension from an employer-based superannuation scheme. The pension was worth about $10,500 a year.

Cath had always left financial decisions to Richard and while they had never discussed it in detail, she'd been under the impression that if Richard died, she would continue to get something from the superannuation scheme.

But after his death, Cath received a letter from the scheme trustees saying the pension ended on Richard's death. Cath wrote back and said there must have been a mistake, as her late husband would have made sure that she would be looked after.

The trustees, while sympathetic, produced evidence that when he retired, Richard was given two options:

• A pension for his life, which started at $8,000.
• A 'joint life' pension for Richard and Cath, which started at $5,000 a year but continued as long as either lived.

Without discussing it with Cath, Richard had signed up for, option 1, the higher pension.

After several months, Cath reluctantly came to accept her lower living standard. She now tells her family and friends how important it is for financial decisions to be discussed and agreed by partners. Although they had received an extra $3,000 a year for the 10 years that Richard was alive, Cath is sure that, if they had discussed it, Richard would have agreed on the 'joint life' alternative.