Death benefits
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What benefits are payable upon death?
If you die, these benefits may be paid if you meet the Scheme’s rules:
- Your spouse or civil partner may get a yearly pension for life, if you paid for this cover.
- Dependents’ Child Allowance (DCA). Your children under 16 (or up to 23 if still studying or seriously incapacitated) may get an allowance. Up to two yearly DCA’s are payable equivalent to 1/6 of your pension. If three or more dependent children exist at the date of your death, the two yearly DCA’s would initially be split evenly between all children.
- If you have a deferred AVC balance, it will be paid as a lump sum. The Trustee has discretionary power to decide who should receive it if you have not yet drawn your pension. This lump sum does not form part of your estate and isn’t taxed as inheritance. If you are already drawing your pension, the AVC fund will be automatically payable to your legal spouse.
- A lump sum may be payable, unless a survivor’s pension is due. This amount is roughly the difference between your contributions plus interest and the total payments made to you.
It is important to keep your Notice of Wish up to date, as the Trustees will refer to this document when making their decision on how to distribute any lump sum death benefits
. If you have registered you can use the portal to update your Notice of Wish and obtain an instant illustration of what your loved ones might receive.
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I’m not married and have paid towards Adult Survivor’s Pension cover. Who may qualify for the benefit?
If you’re not married or in a civil partnership when you die, the Trustee Directors can choose to pay the Adult Survivor’s pension to a ‘surviving dependant.’ This could be a partner or someone else who relies on you financially to a substantial extent. The full details are in the ‘Surviving Dependants Pension Registration form’. Upon death, the Trustee Directors will also need proof of financial dependence, like joint bank statements, mortgage accounts, or bills from the three months before your death.
If the person you want to receive your Adult Survivor’s pension is significantly younger than you, the pension may be reduced depending on the age gap.
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What is the Lump Sum Death Benefit Allowance?
The Lump Sum Death Benefit Allowance (LSDBA) is the maximum amount of tax-free cash that can be paid from a defined benefit pension scheme as a lump sum to your beneficiaries if you die before age 75. If the lump sum paid on death is within this allowance, it is usually free of income tax; if it exceeds the LSDBA, the excess may be taxed. This allowance helps limit how much tax-free money can be passed on from your pension after death.
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What happens if I die after age 75?
If you die after age 75, any lump sum death benefits from APS and NAPS are usually taxable as income to the beneficiary at their marginal income tax rate. This means the money your beneficiaries receive will be subject to income tax.
Disclaimer: The information set out on this page is for guidance and information only.