Death in service and your pension

Guidance about the benefits available if you die in NHS service, who they can be allocated to and whether they are taxable as well as answers to queries about child allowance.
Location: UK
Audience: All doctors
Updated: Thursday 14 May 2020
Piggybank illustration

Payable benefits

  • A lump sum is payable if you die in service.
  • If you have a spouse or civil partner, qualifying partner and/or eligible children, dependants benefits will also be payable.

The benefits from the 2008 section and the 2015 scheme are intended to equate to those provided by the 1995 section.

However, the benefits payable in respect of widowers/civil partners/qualifying partners are potentially greater from the 2008 section as they are based on all of the member’s service and not just on service from 6 April 1988, as is the case in the 1995 section.

2015 scheme benefits only began from 1 April 2015 at the earliest for those not subject to transitional protection.

 

Payable lump sum

If you are a secondary care doctor in the 1995 section

A lump sum payment of twice your actual annual pensionable pay is payable directly to your widow/widower/civil partner/nominated partner in the event of your death whilst still contributing to the NHS pension scheme.

If you are a secondary care doctor in the 2008 section

A lump sum payment of twice your actual reckonable pay is payable directly to your widow/widower/civil partner/nominated partner in the event of your death whilst still contributing to the NHS pension scheme.

If you are working part-time

The lump sum will be based on your pro-rated pensionable salary and not the whole-time equivalent.

If you are a GP, in either the 1995 or 2008 section

A lump sum payment of twice your average uprated earnings is payable directly to your widow/widower/civil partner/nominated partner in the event of your death whilst still contributing to the NHS pension scheme.

If you are in the 2015 scheme

A lump sum of twice your relevant earnings in the last 12 months or revalued relevant earnings in one of the last 10 years (if higher) is payable directly to your widow/widower/civil partner/nominated partner in the event of your death whilst still contributing to the NHS pension scheme.

If you work in the NHS, but do not contribute to a pension scheme

The death lump sum payable will be based on the annual pension you would have received had you retired on the date of death as follows:

  • 1995 section: a lump sum of 3X your annual pension is payable
  • 2008 section: a lump sum of 2.25X your annual pension is payable
  • 2015 scheme: a lump sum of 2.025X your annual pension is payable.

 

Nominating who gets your pension

If you do not want the payment to go to your spouse or civil partner you can nominate another person(s) or institution to receive the payment.

A form, available from the pensions agencies at the following links, will need to be completed:

If no election is made, a payment will still be due and the money will be paid into your estate and will potentially be subject to inheritance tax.

 

Benefits payable to your children

If your children qualify at the time of your death, they will each be entitled to a child’s allowance.

Child allowance payments are payable until your child reaches age 23, unless they are unable to live independently then they will be paid for life.

All details of pension amount payable to your children is available on the NHS pensions website, specifically:

  • 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 provides 18.75% of the 1/60th benefits payable. The 2015 CARE scheme provides 16.875% of the 1/54th benefits
  • in the 1995 section the long term pension for GPs is based on 25% of the 1.4% CARE accrual. In order to provide equal benefits to this the 2008 section pays out 18.755 of 1.87% CARE accrual.

The equality of benefits can be illustrated as follows:

1/80 x 25% = 0.003125
1/60 x 18.75% = 0.003125
1/54 x 16.875% = 0.003125

 

Providing more to your dependents through the NHS pension scheme

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.

You are able to purchase additional pension which can include additional dependant’s benefits. More information can be found in our additional pension guidance.

If you had a contract to purchase added years or additional pension in place for a year or more then the full contract is paid up.

 

Tax charges on lump sum

As a general guide, any amount paid as an NHS lump sum on death in service is:

  • not normally included in an inheritance tax assessment if a member is married or in a civil partnership and payment is made to the deceased members legal spouse or civil partner as of right
  • included in an Inheritance Tax assessment if the member is single or if it is paid to a nominee or a qualifying nominated partner.

In all circumstances, any lump sum must be paid within two years of the date that the scheme was first notified of the member’s death. After two years the lump sum will be subject to a tax charge of up to 45%.

If the payment causes you to exceed the lifetime allowance then the excess will be subject to a tax charge. Please refer to the lifetime allowance guidance for more information on the charges payable.

Your beneficiary is legally responsible for paying any LTA charge that may be due.

 

If you have transitioned into the 2015 pension scheme

The benefits described below will only be payable in relation to your service/earnings in the 2015 scheme.

1995/2008 section benefits are only payable in respect of the ongoing long term dependants pension but will be payable without any enhancement.

More details on this can be found in the NHS scheme protection document.

 

The level of short term pension payable to your nominated receiver

All details of pension amount payable is available on the NHS pensions website.

This is paid directly to your widow or widower or registered partner or nominated partner by your employer or CCG on receipt of the death certificate.

 

Long term benefits payable

If you have been in the NHS pension scheme for less than 2 years no further pension is payable from the scheme unless you are over the scheme’s normal pension age (state pension age in the 2015 scheme). A pension may, however, be payable from the state.

If you have been contributing to the 1995 section of the NHS pension scheme and you are under the normal pension age of 60, then the pension payable thereafter, known as the ‘long term’ pension, will be based on 50% of the tier 2 ill health retirement pension that you would have received had you retired on health grounds as at the date of death. A tier 2 pension is usually enhanced by 2/3 of your prospective service until your normal pension age and means that the pension will be based on an enhanced amount. If you are over 60, the “long term” pension will be based on your actual pension.

If you have been contributing to the 2008 section of the NHS pension scheme and you are under the normal pension age of 65, then the pension payable thereafter, known as the ‘long term’ pension, will be based on 37.5% (secondary care doctors) or 70/187 (GPs) of the tier 2 ill health retirement pension that you would have received had you retired on health grounds as at the date of death. A tier 2 pension is usually enhanced by 2/3 of your prospective service until your normal retirement age and means that the pension will be based on an enhanced amount. If you are over 60, the “long term” pension will be based on your actual pension.

If you have been contributing to the 2015 scheme and you have more than 2 years’ service in the scheme and you are under the state pension age, then the pension payable thereafter, known as the ‘long term’ pension, will be based on 33.75% of the tier 2 ill health retirement pension that you would have received had you retired on health grounds as at the date of death. A tier 2 pension is usually enhanced by 1/2 of your prospective service until your state pension age and means that the pension will be based on an enhanced amount.

In the 1995/2008 sections and the 2015 scheme benefits for a widow will be based on all of your service.

In the 1995 section of the NHS pension scheme benefits for a widower/registered partner/nominated partner will be based only on your service from 6 April 1988 onwards.

In the 2008 section/2015 CARE scheme of the NHS pension scheme benefits for a widow/widower/ registered partner/nominated partner will be based on all your service.

If you are a secondary care doctor in the 1995 section of the NHS pension scheme the long term pension is based on 50% of the 1/80th benefits payable. In order to provide equal benefits to this the 2008 section pays out 37.5% of the 1/60th benefits payable, and the 2015 scheme pays out 33.75% of the 1/54th benefits payable.

In the 1995 section the long term pension for GPs is based on 50% of the 1.4% CARE accrual. In order to provide equal benefits to this the 2008 section provides 37.5% (70/187th) of the 1.87% CARE accrual and the 2015 CARE scheme provides 33.75% of the 1/54th benefits payable.

The equality of benefits can be illustrated as follows:

1/80 x 50% = 0.00625
1/60 x 37.5% = 0.00625
1/54 x 33.75% = 0.00625


All details of pension amount payable is available on the NHS pensions website.

 

If you are in the 2008 section/2015 scheme and have drawn down

The ‘long term’ pension 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).