By Bob Howard
BBC Radio 4's Money Box
Surviving spouses or partners may lose out financially
If you have a personal pension taken out before July 1st 1988 you may want to check the small print.
It's estimated that as many as a hundred and forty thousand contain a clause, that if you die before taking your pension, your spouse or partner will only get the contributions you paid in, not the full pension fund.
That's because, before this date, policyholders were often given a choice to have a higher pension, or a lower one with more generous death benefits.
Many people have forgotten they signed for lower death benefits and that means that if they die prematurely, their surviving spouses or partners, can be tens of thousands of pounds worse off.
Huw Thomas, the former ITN newscaster, was shocked to find that his wife's pensions would have paid out just a fifth of their full value if she died before cashing them in.
Fortunately their financial adviser spotted the clause. He was able to move the fund into a modern pension which paid out the full fund value. Huw Thomas thinks the insurance company should have written to them to warn them.
"I'm amazed that I didn't hear from the insurance company. Why should these policies not be constructed in such a way that everyone is happy with it."
More warnings needed
Some pensions companies have taken action. Legal and General estimate that they have around seven thousand clients with similar policies.
Four years ago the company upgraded them to allow surviving partners to receive the full pension and not just the contributions paid in. Other companies haven't yet done this or alerted their policyholders to the possible losses their spouses or partners face.
Some occupational pension schemes have similar clauses.
Anne Weaver's husband Ted worked for more than twenty years for a construction firm. He was made redundant three years ago and died before taking his pension.
The total value of Ted's pension fund was £390,000 but because he died between leaving the company and taking his pension, his widow was only due the return of the premiums he'd paid in. That was just £31 000 - less than ten per cent of the pension pot he'd accumulated over twenty years. Anne Weaver thinks that's unjust.
"I know that if he was here today he would have been very upset. I feel it's unfair I was only entitled to the contributions and that's all I've received."
Malcolm Mclean, chief executive of the Pensions Advisory Service, says policyholders should check the small print of their pensions and take appropriate action if the death benefit isn't sufficient:
"You can consider going to a different arrangement which provides better death benefits. The other factor is whether there is a possibility of getting separate life insurance cover."
BBC Radio 4's Money Box was broadcast on Saturday, 21 January, 2006, at 1204 GMT.
The programme will be repeated on Sunday, 22 January, 2006, at 2102 GMT.