Death benefits—money purchase schemes
Produced in partnership with Mark Smith of Taylor Wessing
Death benefits—money purchase schemes

The following Pensions guidance note Produced in partnership with Mark Smith of Taylor Wessing provides comprehensive and up to date legal information covering:

  • Death benefits—money purchase schemes
  • Meaning of Dependant, Nominee and Successor
  • Death as an active member
  • Death as a deferred member
  • Death as a pensioner
  • Annuity Protection Lump Sum Death Benefit
  • Dependants' Scheme Pension
  • Dependants' Annuity, Nominees' Annuity and Successors' Annuity
  • Dependants' Drawdown Pension, Nominees' Drawdown Pension and Successor's Drawdown Pension

FORTHCOMING DEVELOPMENT: The Office of Tax Simplification (OTS) has released a report outlining recommendations to make considerable aspects of the design of inheritance tax (IHT) simpler, more intuitive and easier to operate. One of the recommendations is that the government should consider ensuring that death benefit payments from term life insurance are IHT free on the death of the life assured without the need for them to be written in trust. In relation to pensions, the OTS says that IHT could similarly be simplified by changing the current anomalous position under which some pension policies can be included within an estate for IHT purposes while other comparable pension savings, set up under discretionary trust, are not. The OTS notes that in relation to defined contribution pensions, the main reason discretionary trusts are currently used to provide death benefits is to keep such pension savings outside IHT. For more information, see: OTS Inheritance Tax review: Simplifying the design of the tax, Chapter 6, pp 52–55.

THIS PRACTICE NOTE APPLIES ONLY TO REGISTERED MONEY PURCHASE OCCUPATIONAL PENSION SCHEMES

Most pension schemes provide for benefits upon the death of the members. What those benefits will be depends on:

  1. the type of scheme and what benefits it provides—different death benefits are available depending on whether the