Administration of pension rights on death

By Tolley
Trust_tax_img2

The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Administration of pension rights on death
  • Fact finding
  • State pension
  • Defined benefit schemes
  • Defined contribution schemes

Fact finding

When a person dies, the termination and possible transfer of the deceased’s pension rights should be dealt with in the course of administering the estate. Personal representatives can find out about the deceased’s pension entitlements as part of the information gathering process outlined in the Procedure for obtaining a grant of probate guidance note.

If the deceased was in receipt of a pension, the provider must be informed of the death to stop payment, and to obtain details of any outstanding amounts due to or from the estate. Dependants or other beneficiaries may be entitled to continuing benefits. If the deceased had not started to receive a pension but was a member of an occupational scheme or personal pension, death benefits in the form of a lump sum or dependant’s pension will probably be payable.

Pensions in payment can be identified from the deceased’s bank accounts. His personal papers may include pension statements, contracts, payslips, and P60s. Close family members are usually aware of the deceased’s regular sources of income. It is therefore a relatively straightforward matter to identify and obtain contact details of the pension providers who will be able to supply all the information required.

Finding details of pension rights, which are not in payment, can be more challenging. If the deceased was employed when he died, his employer is the obvious place to start. Depending on the deceased’s circumstances and employment history, PRs may need to contact former employers or the administrators of their pension schemes. Details of current and former pension schemes may be found among personal papers.

The government provides a free pension tracing service, Find a lost pension , which may help to track down old pensions, both occupational and personal.

This guidance note describes the types of pension rights which may arise on death, and what the PR needs

More on Administering the estate: