What happens if I die?
Lump sums
If you die while you’re an active member of the Scheme, your dependents will receive a tax-free lump sum of four times your pensionable salary. You can let the trustees know who you want to receive any lump sums by completing an Expression of Wish form. The trustees aren’t legally bound to follow your wishes (this means lump sums are usually free of inheritance tax), but it will help them make their decision.
Example:
Liz dies in service age 48, leaving a husband Tom, also age 48 and two children, Andrea age 18 and Luke age 15. Liz had 10 years service in the Scheme and was earning a pensionable salary of £35,000. The pension benefits payable to Liz’s family are based on a total of 30 years of service, including her prospective service to State Pension Age:
| Tax-free lump sum | £35,000 x 4 | = £140,000 |
| plus | ||
| Dependant’s pension of | 30/160 x £35,000 | = £6,562 pa* |
| plus | ||
| Child allowance per child of | 30/320 x £35,000 | = £3,281 pa |
| * The pension paid will be at a rate of £17,500 pa for the first 6 months, after which it will reduce to £6,562 pa. | ||
You should make sure you keep your Expression of Wish form up to date, especially if your family or marital circumstances change. The Expression of Wish form is held on the Library page.
Dependant’s pension
If you die while an active member of the Scheme, a pension is payable to your spouse or civil partner.
The pension is based on your length of service from the date you joined the Scheme to your date of death, plus the prospective service to your State Pension Age, subject to a maximum of 45 years.
If you have a long-term partner, but you are not married or in a civil partnership, you should complete a Nomination form, as a dependant’s pension is not automatically payable in these circumstances. The Nomination form lets the trustee know that you have a partner. The Nomination form details the conditions that need to be met for a pension to be paid to your partner.
If your spouse or partner remarries or sets up home with a new partner after your death, the pension will cease to be paid. The pension will also reduce if your spouse or partner is more than 10 years younger than you.
Children’s allowances
If you have children under the age of 17 they will be entitled to a children’s allowance. If you have children older than 17 but under 23 and in full-time education or vocational training, they may also be entitled to receive an allowance.
The allowance is 50% of the pension payable to your spouse or partner, split equally between all the children eligible to receive it (i.e. if there is one child, they will receive the full 50% allowance; if there are two children they will each receive 25% and so on). If you don’t leave a spouse or partner, the allowance in enhanced to 66%, shared equally between any eligible children.