Pensions

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Death after retirement FAQs

Common FAQs about pensions and lump sums payable at death after retirement, including sums payable to children, spouse or partner.

 

 

What benefits are payable to my dependants if I die after I have fully retired from either the 1995 or 2008 section of the NHS pension scheme?

Depending on how long your pension has been in payment it may be possible for a lump sum to become payable on your death after retirement.

However, irrespective of how long your pension has been in payment a qualifying partner pension and/or eligible child allowance will also be payable.


What is a qualifying partner?

A qualifying partner can be your spouse, registered civil partner or a nominated partner (you must be free to marry or enter into a registered civil partnership for your nomination to be valid).


When is a lump sum payable to my dependants?

If you die within 5 years of retirement a balancing lump sum payment (also known as the death deficiency payment) of 5 years of your pension, less the pension that you have already received, will be payable to your dependants.  

If you are a member of the 1995 section of the NHS pension scheme the lump sum payment is limited to a maximum of:

  • twice your annual salary at retirement less the retirement lump sum (and any commuted lump sum) taken.  If you are a primary care doctor, ‘annual salary at retirement’ means your average annual dynamised remuneration.   

If you are a member of the 2008 section of the NHS pension scheme the lump sum will be the lesser of:

  • 5 times the annual rate of your pension, less the amount of pension already paid to you; and
  • for secondary care doctors twice actual/reckonable annual pay at retirement (less any lump sum taken by commutation or otherwise)
  • for primary care doctors twice average annual dynamised earnings at retirement (less any lump sum taken by commutation or otherwise).   

I commuted pension in favour of extra lump sum.   If I die within 5 years of retirement how is the lump sum calculated?

When undertaking the calculation, detailed in the question above, the pensions agencies will look at your pension before any commutation in order to arrive at the starting point of 5 times your pension.  However, when calculating twice your pay less the retirement lump sum, it is the lump sum actually received that is taken into account.


I retired on health grounds and was initially paid a Tier 2 (upper tier) pension.  As a result of earning in excess of the Lower Earnings Limit my pension has been substituted with a Tier 1 (lower tier) pension.  If I die within 5 years of retiring and during the time that my pension has been substituted with a Tier 1 (lower tier) pension how is the lump sum calculated?

If you die in receipt of a substitute Tier 1 (lower tier) pension but within the 12 month protected period (which starts from when your pay from non NHS employment first exceeded the Lower Earnings Limit) then the death deficiency lump sum will be based on your original Tier 2 (upper tier) pension. If, however, you were to die whilst still in receipt of a Tier 1 (lower tier) pension outside of 12 months after first having exceeded the Lower Earnings Limit then the death deficiency payment will be based on your Tier 1 (lower tier) pension.  Please refer to our Ill Health Retirement FAQ for more information on this.


I am in receipt of a draw down pension from the 2008 section of the scheme.  How much lump sum is payable in the event of my death whilst in retirement?

If you are an active member of the 2008 section in receipt of draw down benefits, and you die within 5 years of drawing down, the lump sum will be calculated as per the rules for death in service (in relation to your ongoing active pensionable service), and death after retirement (in relation to the drawn down benefits).  Please refer to our FAQ on ‘death after pension draw down’ for more information.


Who can the death deficiency lump sum be paid to if death occurs within 5 years of retirement?

The death deficiency payment is paid directly to your spouse/civil partner or nominated unmarried partner or elected person(s).  

If you are not married, or in a civil partnership, the payment made to an elected person may be subject to inheritance tax.    

If you are not married or in a civil partnership and have not nominated anyone to receive this payment it will be paid into your estate and will potentially be subject to inheritance tax.

The form to nominate your unmarried partner to receive this benefit is available from the following agencies websites:

What tax charges are payable on any death deficiency payment made?

Most lump sums will be below the lifetime allowance but those that are in excess of the lifetime allowance are liable for a lifetime allowance charge at 55%. It is for your personal representative to inform HM Revenue and Customs (HMRC) of the amount of lump sum paid and to arrange for any lifetime allowance charge to be paid to HMRC.  Your beneficiary is responsible for paying any lifetime allowance charge that may be due.

Please refer to the Lifetime Allowance FAQ for more information on the charges payable.


What pension is payable to my qualifying partner following my death after retirement?

For the first three months (six months if there are dependant children) a short-term pension is payable which will be at the same rate as your pension.   However, if your pension has been subject to any of the following, these will be ignored:
  • any actuarial reduction (as a result of retiring earlier than your normal pension age),
  • any reduction as a result of giving up pension in favour of lump sum (commutation), or 
  • any reduction as a result of your pension being abated (following a return to NHS employment after ill health retirement).

Following the ‘short term pension’ what is payable to my qualifying partner?

For members of the 1995 section of the NHS pension scheme the benefits payable for life are as follows:
  • Widow’s pension: Half of your (pre-commutation, pre- actuarial reduction, pre-abatement) pension. 
  • Widower’s registered civil partner’s/unmarried partner’s pension:  As for the widow’s pension above but based only on service after 6 April 1988 (unless the increased widower/registered civil partner/unmarried partner pension has been purchased).
For members of the 2008 section of the NHS pension scheme the benefits payable for life are as follows:
  • 37.5% of the pre-commutation pension (for secondary care doctors) or 70/187ths of the pre-commutation pension (for primary care doctors .  These benefits equate to those payable from the 1995 section of the NHS pension scheme.  

I married after retirement.  Do my benefits differ as a result of this?

If you are a male former member of the 1995 section who has married after retirement your widow’s pension will only be based on your service from 6 April 1978 onwards. 


I am separated from my legal spouse and am living with a new partner.  Who will receive benefits after my death?

Your legal spouse will continue to qualify for the widow/widower/registered civil partner pension until you are legally divorced. However all eligible dependant children will qualify for the child allowance.

You can nominate your partner to receive the death deficiency payment. However if you do not make a nomination to this effect then any payment will be paid directly to your legal spouse.  Your partner will not qualify for a dependant pension.

 

Will my children receive a payment if I die after retirement?

Will my children receive a payment if I die after retirement?
If your child/children qualify as dependant children, at your death, then a child allowance is payable to each qualifying child.

In order to qualify they will need to be financially dependent on you at the time of ceasing pensionable employment and at the time of death and be:

  • under age 23,
  • over age 23 but unable to earn a living due to a permanent physical or mental impairment present at the time of your death.

If a child is born one year or less after you leave pensionable employment the child will count as being a dependant child if they are dependant on you when you die. A child can include your biological child, an adopted child, a step child, a child of your civil or nominated q



What payment will my qualifying child or children receive?

If you are a member of the 1995 section the amount payable to your qualifying children will depend on whether a widow/widower/registered partner or nominated partner pension is also payable:

  • If a payment is also being made to a widow/widower/registered partner/nominated partner then each child is entitled to a quarter of the pension that is being paid to you at the date of death. This is the pre-commutation, pre-actuarial reduction, pre-abatement pension.  A maximum of one half of the pension is payable to two or more children.
  • Where no payment is being made to a widow/widower/registered partner/nominated partner then each child is entitled to a third of the pension that is being paid to you at the date of death. This is the pre-commutation, pre-actuarial reduction, pre-abatement pension.  A maximum of two thirds of the pension is payable to two or more children.

If you are a member of the 2008 section the amount payable to your qualifying children will depend on whether a widow/widower/registered partner or nominated partner pension is also payable. The 2008 section bases the child allowance on 75% of the pension that is being paid to you at the date of death.  It is then allocated as follows:

  • If a payment is also being made to a widow/widower/registered partner/nominated partner then each child is entitled to a quarter of the allowance (the allowance is 75 % of the pre-commutation pre-actuarial reduction, pre-abatement pension payable at the date of death).  A maximum of a half of the allowance (half of 75% of the pension) is payable to two or more children.
  • Where no payment is being made to a widow/widower/registered partner/nominated partner then each child is entitled to a third of the allowance (the allowance is 75% of the pre-commutation, pre-actuarial reduction, pre-abatement pension payable). A maximum of two thirds of the allowance (75% of the pension) is payable to two or more children.

If you are a secondary care doctor in the 1995 section of the NHS pension scheme the child allowance is based on 25% of the 1/80th benefits payable.  In order to provide equal benefits to this the 2008 section pays out as 25% of 75% of the 1/60th benefits payable.

If you are a primary care doctor in the 1995 section of the NHS pension scheme the child allowance is based on 25% of the 1.4% CARE accrual.  In order to provide equal benefits to this the 2008 section pays out 25% of 75% of 1.87% CARE accrual.

The equality of benefits can be illustrated as follows:

Secondary care doctors -

1/80 x 25%            = 0.003125
1/60 x 75% x 25%       = 0.003125

Primary care doctors -

1.4% x 25%           = 0.035
1.87% x 75% x 25%     = 0.035

If your service prior to retirement was less than 10 calendar years the child allowance will be based on 10 years’ service (if you were a member of the 2008 section or retired after 1 April 2008 from the 1995 section) or on the lesser of 10 years service or that which you could have achieved by age 65 (if you were a member of the 1995 section and retired before 1 April 2008).


When will the child allowance become payable?

If your child is in the care of a qualifying partner who is in receipt of a short term pension, the child allowance will start from the day after the short term widow/widower/registered civil partner/nominated partner pension ends.  This is six months after the date of death.

If a widow/widower/registered partner/nominated partner pension is payable but your child is not in that person’s care then your child will receive a short term pension payable for three months,  followed by the child allowance thereafter.  Please refer to the earlier question covering the calculation of qualifying partner pensions for information on the calculation of short term pensions.   

Where no qualifying partner pension is payable, the short term pension is payable to your child for six months.  Thereafter, the child allowance becomes payable. Please refer to the earlier question covering the calculation of widow/widower/registered partner/nominated partner pensions for information on the calculation of short term pensions.  


Is the child allowance payable for life?

Child allowance payments are payable until your child reaches age 23.


My child will not be able to live independently.  Can the child allowance be paid for life?

If your child, as result of mental or physical impairment present at the time of your death, is unable to support themselves the child allowance can be paid for life.  NHS Pensions will need to be provided with a medical certificate or evidence of your child’s condition.  This will be sent to the scheme’s medical advisers for approval.


Is there any way I can provide more benefits to my dependants, through the NHS pension scheme, than those detailed above?


You are able to allocate a maximum of 1/3 of your pension to a dependant which will be payable in addition to the benefits outlined above.  An election to allocate part of your pension can be made within one month of retirement.