Marriage and Civil Partnership
If you marry or enter a civil partnership your spouse / civil partner ("spouse") becomes eligible for 50% of your pension in the event of your death. We call this the dependant's pension. If your spouse survives you, this will be paid to your spouse for the rest of their life.
The Trustees will need to see proof or your marriage or partnership in the form of a certificate before these benefits can be put into payment.
Your spouse will require a bank account and a National Insurance Number in order to receive their dependant's pension.
Even if you are not married or in a civil partnership anyone who you have nominated as your financially interdependent partner may qualify for your dependant's pension.
Children
Your first child becomes eligible for 25% of your pension in the event of your death. This is payable until the child reaches age 18 if they are not in full-time education, or age 21 if they are in full-time education.
The Trustees will need to see proof of the age of your child in the form of a birth certificate before these benefits can be put into payment.
Formal proof of full-time education will also be needed from the education establishment your child is studying with, if applicable.
A second child increases the amount payable to 50% of your pension. Subsequent children do not increase the amount payable any further. The amount payable is split equally between all eligible children.
The amount may be paid to a parent, guardian or responsible adult on the child's behalf.
Divorce
If you divorce or dissolve a civil partnership, a court may order that you must give up some of your pension to your ex-spouse. This is often expressed by the court as a percentage of your benefits, or less often as a fixed amount.
The Trustees will need to see various formal documents associated with the divorce, including:
- a copy of the Decree Absolute, in the case of divorce,
- a copy of the Final Order of dissolution, in the case of ending a civil partnership,
- and a copy of the Court Order regarding your money and property.
We will use the Court Order to calculate:
- how much of your pension you must give up,
- the lump sum of money to be paid to your ex-spouse's pension arrangement,
- and the administration costs to be paid by you and your ex-spouse.
Your ex-spouse must have a registered pension arrangement to receive the lump sum payout. If they do not have one, they will need to first set one up.
Arranging this payment creates administration costs for the Scheme that must be paid for by yourself and / or your ex-spouse. The Court Order will generally state who must pay the costs.
The Court Order is legally binding on the Scheme. We are legally obliged to pay the amount ordered. If administration costs are not paid in a timely fashion, we may be forced to make an additional deduction from your pension and/or your ex-spouse's payout.
Ill-Health
Special legislation and Scheme rules allow for payment of your benefits if you are prevented from working due to ill-health.
Pension legislation prohibits the payment of pension benefits before the age of 55. However if you qualify for payment under ill-health incapacity, benefits may be paid earlier than age 55.
Ill-health benefits can be paid as a single lump sum.
The Trustees will appoint a medical advisor who will decide whether your condition means that you can no longer work. You must provide formal evidence of your medical condition from a qualified medical professional so that the medical advisor may make a ruling on behalf of the Trustees.
The Trustees need not be party to any medical evidence, this is kept confidential between your medical advisor and that of the Trustees.
Benefits on Death
Death Benefit before Retirement
In the event of your death before you start taking your benefits, if your spouse or partner survives you they are entitled to receive 50% of the pension you were entitled to at the date of death.
An income of 25% of your pension is payable to each dependent child up to a maximum of 50% for two or more children.
The pension payable is a proportion of whichever pension you qualify for and is higher at the date of your death.
So if you qualify for the Final Salary Pension and this is higher, your dependant's pension is a proportion of the Final Salary Pension.
Otherwise it is a proportion of the Money Purchase Pension.
You can find out more about the two different types of pension here.
Death Benefit after Retirement
Once your pension is in payment, it continues to be paid for the rest of your life.
When you die, if your spouse or partner survives you they are entitled to receive 50% of the income you were entitled to at the date you retired, increased by the same rate of annual pension increases that has been applied to your income since you retired.
This income is calculated regardless of any pension commencement lump sum you took on retirement.
(Note that if you took a tax-free cash lump sum at retirement in exchange for a reduction in your monthly income, your spouse’s starting pension could actually work out as more than 50% of the pension income you were receiving at your death).
If you die within five years after retiring, your beneficiaries will also receive the balance of the first five years of income that would have been paid to you, paid as a lump sum benefit. This is known as the five year guarantee. This sum can be paid to any person (whether financially related to you or not), any organisation or charity you have nominated.
When you die, the Trustees of the Scheme will consider any person on your death benefit nomination form to decide who is to receive your dependant's pension, so it is important that you keep your nomination form up to date to make your intentions clear, even after you have retired.
The Trustees may ask to see proof that your nominated dependants were financially interdependent with you in order to make this decision.
The Trustees have complete discretion over what benefits to pay and to whom they are paid. They are not legally obliged to act in accordance with your nomination.
In this way any death benefit paid to your beneficiaries may be legitimately excluded under HM Revenue & Customs Inheritance Tax rules.