A Guide to Death Benefits
This guide provides you with easy reference to the types of death benefit options available under the new simplified tax regime. The new regime (introduced on 6 April 2006) removed many of the differences that used to exist under the personal and occupational regimes, and delivered considerable flexibility in the ways in which death benefits can be paid.
In general, the death benefits will be determined according to whether pension benefits are vested or unvested (crystallised or uncrystallised), and if vested, whether benefits are being taken via a Secured or Unsecured Pension arrangement.
The extent to which flexibility is permitted is a decision for the individual scheme – so you should check availability of options with the scheme provider.
Definitions
Dependant – a person who, at the date of the member’s death, was:
- a spouse or civil partner of the member
- married to, or a civil partner of, the member when benefits vested and subsequently divorced, or who have had their civil partnership dissolved, before death of the member
- a child, including legally adopted child, of the member under age 23 (or of any age if dependent due to physical or mental impairment)
- financially dependent on the member or had a financial relationship of mutual dependence with the member
- dependent on the member because of physical or mental impairment.
(Transitional rules apply for pensions already in payment at 5 April 2006)
Beneficiaries – any of the following are potential beneficiaries:
- a dependent
- an individual
- a company
- a trust
- a charity
- member’s legal personal representative/estate.
