Death benefits

Provision of death benefits through registered occupational pension schemes

An important facet of most, if not all, retirement benefit schemes is their ability to provide survivors’ benefits payable in the event of death, as well as benefits in the event of retirement due to old age or ill health. Most registered occupational pension schemes (both defined benefit and money purchase) provide death benefits if a member dies while in active service with the sponsoring employer, during a period of deferment or while in receipt of a pension.

The particular form of death benefits provided by an occupational pension scheme will depend on:

1. •

   the type of scheme (eg defined benefit or money purchase)

2. •

   the member’s status at death (ie active, deferred, pensioner), and

3. •

   what death benefits HMRC permits as an authorised payment. If a death benefit is an unauthorised payment, it will be subject to punitive tax charges

Some of those death benefits (typically lump sums, and possibly spouses’ and dependants’ pensions) may be insured, with the insurance policy or policies being held in the name of the scheme trustee and constituting a scheme asset.

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