Ways of providing death-in-service benefits

Employers frequently offer their workforce death-in-service benefits (also known as 'life assurance' or 'life cover' benefits). The provision of death-in-service benefits is typically confined to employees (hence the name ‘death in service’), but the employer may in certain circumstances choose to extend the provision of such a benefit beyond retirement.

Employers may provide death-in-service benefits by one of three methods:

1. •

   by means of a standalone trust-based arrangement which, although a registered pension scheme for the purposes of Part 4 of the Finance Act 2004 (FA 2004), provides only death-in-service benefits—such schemes are commonly referred to as ‘life cover only schemes’, 'death-in-service schemes' or ‘standalone life assurance schemes’

2. •

   by means of a registered pension scheme (typically an occupational pension scheme) under which the death-in-service benefits form part of the wider benefit structure of the scheme. In this type of arrangement, a scheme member may receive:

   1. ◦

      both death benefits (including death-in-service benefits) and retirement benefits, or

   2. ◦

      death-in-service benefits only, eg because the member has elected not