Pension payable on death—who is a dependant, nominee or successor?
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Pension payable on death—who is a dependant, nominee or successor?

The following Pensions guidance note Produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Pension payable on death—who is a dependant, nominee or successor?
  • Types of death benefits payable
  • Who is a dependant?
  • Establishing dependency
  • Who is a nominee?
  • Who is a successor?
  • Pension sharing and pension death benefits in payment

Types of death benefits payable

There are two types of scheme benefits payable on a member’s death:

  1. pension death benefits, and

  2. lump sum death benefits

Until 5 April 2015, under the pension death benefit rules of the Finance Act 2004 (FA 2004), s 167, a pension death benefit could only be paid to a dependant of a member if it was to be an authorised payment. The term ‘dependant’ is defined in FA 2004 Sch 28 Pt 2 para 15.

From 6 April 2015, a pension death benefit may be paid not only to a dependant of a deceased member but also to a nominee or successor and still qualify as an authorised payment. The term 'nominee' is defined in FA 2004 Sch 28 Pt 2 para 27A while the term 'successor' is defined in FA 2004 Sch 28 Pt 2 para 27F.

More specifically, the following pension death benefits may be payable:

  1. a dependant’s scheme pension—this is payable from both a defined benefits arrangement and a money purchase arrangement

  2. an annuity—this is payable from a money purchase arrangement only, either to a dependant, a nominee or a successor

  3. a dependant’s drawdown pension—this is payable from a money purchase arrangement only. The dependant must have become entitled to it and have designated sums or assets to a dependant’s drawdown pension fund before