The National Health Service Pension Scheme Regulations 2008

Lump sum death benefits E+W

3.E.16    Lump sum benefits on death: introduction E+W

(1) If a member or a recent leaver dies before reaching the age of 75, a lump sum is payable in accordance with this Chapter.

(2) Paragraph (1) is subject to the following provisions of this Chapter.

(3) This regulation does not apply if—

(a) the member is—

(i) a pensioner member, or

(ii) a pension credit member who dies after any benefits attributable to the pension credit have become payable, and

(b) the death takes place more than 5 years after the member’s pension becomes payable.

3.E.17    Amount of lump sum: single capacity members and recent leavers (disregarding regulation 3.D.5 employments) E+W

[F1 (1) The lump sum payable on death of an active member or a non-contributing member, who is not a deferred member or a pensioner member, is an amount equal to—

(a) in the case of a deceased active member, twice the annual average of the member’s uprated earnings at the date of death, or

(b) in the case of a deceased non-contributing member, twice the annual average of the member’s uprated earnings on the member’s last day of pensionable service.]

[F2 In the case of a 2008 Section Optant, this is subject to regulation 3.K.22.]

(2) The lump sum payable on the death of a pensioner member, who is not also an active member [F3 or a non-contributing member] or a deferred member, is, in respect of each pension to which the member is entitled, the lesser of—

(a) an amount equal to five times the annual rate of the pension (other than any additional pension), less the amount of the pension payments already made to the member, and

[F4 (b) an amount equal to twice the annual average of the member’s uprated earnings by reference to which the pension was calculated, less the aggregate of—

(i) any lump sum paid to the member when the pension came into payment as a result of the member exercising the option under regulation 3.D.10, and

(ii) in the case of a 2008 Section Optant, the lump sum paid to the Optant under regulation 3.K.11.]

[F5 This is subject to regulations 3.E.20A and 3.E.21.]

(3) The lump sum payable on the death of a deferred member, who [F6 was not an active member or a non-contributing member] or a pensioner member, is an amount equal to the member’s deferred annual pension, multiplied by 2.25.

(4) The lump sum payable on the death of a recent leaver is an amount equal to the deferred annual pension to which the person would have been entitled if the person were entitled to such a pension calculated by reference to the pensionable service the recent leaver was entitled to count in the service that has ceased, multiplied by 2.25.

(5) References in this regulation to a member’s deferred annual pension are to the annual pension, in respect of any period of pensionable service, to which the member would have been entitled under regulation 3.D.1 (normal retirement pensions) if on the date of death the member had become entitled to such a pension (other than any additional pension).

[F7 (6) The reference in paragraph (2)(a) to the annual rate of the member’s pension is to the member’s pension after it has been reduced to take account of—

(a) the exercise by the member of any option under regulation 3.D.10, and

(b) in the case of a 2008 Section Optant, the lump sum paid to the Optant under regulation 3.K.11.]

(7) If a pensioner member exercised the option under regulation 3.D.14 (election to allocate pension), the reference in paragraph (2)(a) to the amount of the pension payments already made to the member is a reference to the amount of the pension payments that would have been made apart from the election.

(8) For the purposes of this regulation, the fact that a person—

(a) [F8 was an active member or a non-contributing member] in service in an employment in respect of which the member has exercised the option under regulation 3.D.5 (partial retirement),

(b) is a deferred member as a result of service in an employment in respect of which the member has exercised that option, or

(c) is a pensioner member by virtue of being entitled to a pension under that regulation,

is ignored.

Textual Amendments

F1 Reg. 3.E.17(1) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 76(a) (with reg. 89)

F2 Words in reg. 3.E.17(1) inserted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 83(2)

F3 Words in reg. 3.E.17(2) inserted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 76(b)(i) (with reg. 89)

F4 Reg. 3.E.17(2)(b) substituted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 83(3)

F5 Words in reg. 3.E.17(2) inserted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 76(b)(iii) (with reg. 89)

F6 Words in reg. 3.E.17(3) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 76(c) (with reg. 89)

F7 Reg. 3.E.17(6) substituted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 83(4)

F8 Words in reg. 3.E.17(8)(a) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 76(d) (with reg. 89)

3.E.18    Amount of lump sum: dual capacity members (disregarding regulation 3.D.5 employments) E+W

(1) Paragraph (2) applies for determining the lump sum payable by virtue of this regulation on the death of a member who—

(a) [F9 was an active member or a non-contributing member] otherwise than in service in an employment in respect of which the member has exercised the option under regulation 3.D.5 (partial retirement: members aged at least 55), and

(b) [F10 was] also a pensioner member.

(2) The lump sum is an amount equal to the sum of—

[F11 (a) five times the annual rate of pension—

(i) payable under regulation 3.D.7(5) (tier 2 ill-health pension), if the deceased had not reached the age of 65,

(ii) payable under regulation 3.D.1 (normal retirement pensions), if the deceased had reached the age of 65,

to which the member would have been entitled—

(aa) in the case of a deceased active member, at the member’s date of death, or

(bb) in the case of a deceased non-contributing member, on the last day of the member’s pensionable service, and]

(b) in respect of each pension to which the person has been entitled for less than 5 years, the lesser of—

(i) five times the annual rate of the pension payable after exercising any option under regulation 3.D.10 (general option to exchange part of pension for lump sum), less the amount of the pension payments already made to the member, and

(ii) an amount equal to twice the annual average of the member’s uprated earnings at the date of death by reference to which the pension was calculated, less any lump sum paid to the member when the pension came into payment as a result of the member exercising the option under regulation 3.D.10 (general option to exchange part of pension for lump sum).

[F12 This is subject to paragraph (4).]

(3) If the pensioner member exercised the option under regulation 3.D.14, the reference in paragraph (2)(b) to the amount of the pension payments already made to the member is a reference to the amount of the pension payments that would have been made apart from the election.

[F13 (4) In the case of a 2008 Section Optant—

(a) the reference to the annual rate of pension in paragraph (2)(b)(i) is to the annual rate of pension after it has been reduced to take account of the lump sum paid to the Optant under regulation 3.K.11, and

(b) the amount of the Optant’s uprated earnings for the purposes of paragraph (2)(b)(ii) shall be reduced by the aggregate of—

(i) the amount of the lump sum paid to the Optant under regulation 3.K.11, and

(ii) any lump sum under regulation 3.D.10 referred to in paragraph (2)(b)(ii).]

Textual Amendments

F9 Words in reg. 3.E.18(1)(a) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 77(a)(i) (with reg. 89)

F10 Word in reg. 3.E.18(1)(b) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 77(a)(ii) (with reg. 89)

F11 Reg. 3.E.18(2)(a) substituted (1.4.2009 with effect from 1.4.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2)(4), 77(b) (with reg. 89)

F12 Words in reg. 3.E.18(2) inserted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 84(2)

F13 Reg. 3.E.18(4) inserted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 84(3)

3.E.19    Amount of lump sum: dual capacity members: members with pensions under regulation 3.D.5 E+W

(1) Paragraph (2) applies for determining the lump sum payable by virtue of this regulation on the death of a member who—

(a) [F14 was an active member or a non-contributing member] in service in an employment in respect of which the member has exercised the option under regulation 3.D.5 (partial retirement: members aged at least 55), and

(b) [F15 was] a pensioner member by virtue of being entitled to a pension under that regulation.

[F16 (2) The lump sum is an amount—

(a) equal to the sum of—

(i) in the case of a deceased active member, twice the appropriate fraction of the annual average of the member’s uprated earnings at the date of death, or

(ii) in the case of a deceased non-contributing member, twice the appropriate fraction of the annual average of the member’s uprated earnings at the member’s last day of pensionable service, and

[F17 (b) if the member had been entitled to any pensions under regulation 3.D.5 for less than 5 years, the lesser of—

(i) the total of the guarantee amounts for each of those pensions (see paragraph (3)), and

(ii) the aggregate lump sum cap (see paragraph (4));

(c) in the case of a 2008 Section Optant, this is subject to paragraph (4) and regulation 3.K.22.]]

(3) The guarantee amount for a pension under regulation 3.D.5 is five times the annual rate of the pension at the date of death, less the amount of the pension payments already made to the member in respect of the pension.

[F18 (4) The aggregate lump sum cap is equal to twice the appropriate fraction of the annual average of the member’s uprated earnings by reference to which the pension to which the member became entitled on last exercising the option under regulation 3.D.5 was calculated, less the total of any lump sums paid to the member—

(a) in exchange for pensions under regulation 3.D.5 as a result of the member exercising the option under regulation 3.D.10, and

(b) in the case of a 2008 Section Optant the lump sum paid to that Optant under regulation 3.K.11.]

(5) In this regulation “the appropriate fraction” means—

where—

• DPS is, where the member continues in pensionable service as an active member [F19 or a non-contributing member] on the option day (or the last such option day if the option has been exercised more than once), the total percentage of the pension which does not form part of the specified percentage of pension at the option day, and

• TDPS is the aggregate of DPS and the total percentage of the pension (at the option day or the last such option day if the option has been exercised more than once) which forms part of the specified percentage of pension.

Textual Amendments

F14 Words in reg. 3.E.19(1)(a) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 78(a)(i) (with reg. 89)

F15 Word in reg. 3.E.19(1)(b) substituted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 78(a)(ii) (with reg. 89)

F16 Reg. 3.E.19(2) substituted (1.4.2009 with effect from 1.4.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2)(4), 78(b) (with reg. 89)

F17 Reg. 3.E.19(2)(b)(c) inserted (with effect from 1.4.2008) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2)(3), 85(2)

F18 Reg. 3.E.19(4) substituted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 85(3)

F19 Words in reg. 3.E.19(5) inserted (1.4.2009) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2009 (S.I. 2009/381), regs. 1(2), 78(c) (with reg. 89)

3.E.20    Amount of lump sum: pension credit members E+W

(1) The lump sum payable on the death of a pension credit member who dies before any benefits derived from the member’s pension credit have become payable is an amount equal to the amount of the annual pension to which the member would have become entitled under regulation 3.D.2 (pension credit member) if the member had reached the age of 65 on the date of death, multiplied by 2.25.

(2) The lump sum payable on the death of a pension credit member who dies after a pension under that regulation has become payable is equal to the lower of—

(a) the annual amount of the pension that would have been payable to the member during so much of the period of 5 years beginning with the date on which the pension became payable as falls after the date of death, and

(b) ,

where—

• AUE is the amount as at the valuation day of the annual average of the uprated earnings of the debit member from whose rights the pension credit member’s pension credit is derived, and

• CLS is the amount of the lump sum (if any) paid to the pension credit member as a result of the member exercising the option under regulation 3.D.10 (general option to exchange part of pension for lump sum) on becoming entitled to the pension under regulation 3.D.2.

(3) For the purposes of paragraph (2) the annual amount of the pension is taken to be the sum of—

(a) the annual amount of the pension as at the beginning date for that pension, and

(b) the increase (if any) in that annual amount under the Pensions (Increase) Act 1971(1) payable as at the date of death.

(4) In this regulation—

“valuation day” means the day referred to in section 29(7) of the 1999 Act, and

“the beginning date”, in relation to a pension, has the meaning given by section 8(2A) of the Pensions (Increase) Act 1971.

[F20 Pension payable when member dies on or after reaching age 75 E+W

3.E.20 A.— (1) If a pensioner member or a pension credit member dies—

(a) on or after reaching age 75, and

(b) before the fifth anniversary of the date on which the member’s pension became payable,

an annual pension, calculated in accordance with paragraph (2), may be payable from the day following the date of the member’s death until the anniversary referred to in sub-paragraph (b).

(2) The pension payable under paragraph (1) is determined by—

(a) calculating the amount of the lump sum that would have been payable in respect of the pensioner member or pension credit member under regulation 3.E.17(2) or, as the case may be, 3.E.20 as if on the day the member died the member had not reached the age of 75, and

(b) converting any amount determined in sub-paragraph (a) to an annual pension payable for the period specified in paragraph (1), by reference to guidance and tables provided by the Scheme actuary for the purpose.

(3) The “beginning date” of the pension calculated in paragraph (2) will, for the purposes of the Pensions (Increase) Act 1971, be the day immediately following the date of death of the pensioner member or pension credit member.

(4) The pension calculated under this regulation will be payable in accordance with regulation 3.E.21.]

Textual Amendments

F20 Reg. 3.E.20A inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 69 (with reg. 93)

3.E.21    Payment of lump sums [F21 or pensions] on death E+W

(1) A lump sum payable under regulation 3.E.16 [F22 or a pension payable under regulation 3.E.20A] must be paid in accordance with this regulation.

(2) The lump sum [F23 or pension] must be paid to the member’s personal representatives, except so far as it is payable to a different person [F24 or body under paragraph (4), (6) or (10)].

(3) A member may give notice to the Secretary of State—

(a) specifying—

(i) the member’s personal representatives,

(ii) one or more other individuals, or

(iii) one incorporated or unincorporated body,

to whom the lump sum [F25 or pension] is to be paid, and

(b) where two or more individuals are specified, specifying the percentage of the payment payable to each of them.

(4) If the member—

(a) has given notice under paragraph (3) specifying a person, and

(b) has not revoked that notice,

the lump sum [F25 or pension] (or, as the case may be, the percentage of it specified in respect of the person) may be paid to the person, unless paragraph (5) or (7) applies.

(5) This paragraph applies if—

(a) the person specified in the notice has died before the payment can be made, or

(b) payment to that person is not, in the opinion of the Secretary of State, reasonably practicable.

(6) If the member—

(a) leaves a surviving adult dependant, and

(b) has not given notice under paragraph (3) or has revoked any notice so given,

the lump sum [F26 or pension] may be paid to that person unless paragraph (7) applies.

(7) This paragraph applies if the person to whom the lump sum [F27 or pension] (or a specified percentage of the lump sum [F27 or pension]) would otherwise be payable has been convicted of an offence specified in regulation 3.J.7(2) (forfeiture of rights to benefit) and the Secretary of State has directed, as a consequence of that conviction, that the person’s right to a payment in respect of the member’s death is forfeited.

(8) A notice under paragraph (3)—

(a) must be given in writing, and

(b) may be revoked at any time by a further notice in writing.

(9) The Secretary of State may pay the lump sum to any person claiming to be the member’s personal representative or otherwise to fall within paragraph (3)(a), without requiring proof that the person is such a person concerned, if the lump sum does not exceed—

(a) £5,000, or

(b) any higher amount specified in an order made under section 6(1) of the Administration of Estates (Small Payments) Act 1965(2) as the amount to be treated as substituted for references to £500 in section 1 of that Act.

[F28 (10) The member’s personal representatives may, as part of the distribution of the member’s estate, give irrevocable notice to the Secretary of State—

(a) specifying—

(i) one or more individuals, or

(ii) one incorporated or unincorporated body,

to whom the benefit of the pension under regulation 3.E.20A from the date of receipt of the notice by the Secretary of State is to be assigned, and

(b) where two or more individuals are specified, specifying the percentage of the pension payable to each of them,

and the pension (or, as the case may be, the percentage of it specified in respect of the person) may be paid to the person or body, unless paragraph (11) applies.

(11) This paragraph applies if—

(a) the person specified in the notice has died before the payment can be made,

(b) payment to that person or body is not, in the opinion of the Secretary of State, reasonably practicable, or

(c) the person to whom the pension (or a specified percentage of the pension) would otherwise be payable has been convicted of an offence specified in regulation 3.J.7(4) (forfeiture of rights to benefit) and the Secretary of State has directed, as a consequence of that conviction, that the person’s right to a payment in respect of the member’s death is forfeited.

(12) The prohibition on assignment of benefits in regulation 3.J.13 (prohibition on assignment or charging of benefits) shall not apply to an assignment by personal representatives under this regulation.]

[F29 (13) In the case of a 2008 Section Optant, this regulation is subject to regulation 3.K.12.]

Textual Amendments

F21 Words in reg. 3.E.21 heading inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(a) (with reg. 93)

F22 Words in reg. 3.E.21(1) inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(b) (with reg. 93)

F23 Words in reg. 3.E.21(2) inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(c)(i) (with reg. 93)

F24 Words in reg. 3.E.21(2) substituted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(c)(ii) (with reg. 93)

F25 Words in reg. 3.E.21(3)(4) inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(d) (with reg. 93)

F26 Words in reg. 3.E.21(6) inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(d) (with reg. 93)

F27 Words in reg. 3.E.21(7) inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(e) (with reg. 93)

F28 Regs. 3.E.21(10)-(12) inserted (1.10.2008) by The National Health Service Pension Scheme and Injury Benefits (Amendment) Regulations 2008 (S.I. 2008/2263), regs. 1(2)(3), 70(f) (with reg. 93)

F29 Reg. 3.E.21(13) inserted (1.10.2009) by The National Health Service Pension Scheme, Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2009 (S.I. 2009/2446), regs. 1(2), 86

3.E.22    Tax treatment under the 2004 Act of lump sums payable on pensioners’ deaths E+W

(1) A pensioner’s lump sum (less any amount deducted under paragraph (4) where that applies) is treated for the purposes of the 2004 Act as a pension protection lump sum death benefit if the member has given the Scheme administrator a statement in writing that any such lump sum is to be treated as such a benefit.

(2) In this regulation “pensioner’s lump sum” means—

(a) a lump sum payable under regulation 3.E.16 to which regulation 3.E.17(2) applies, or

(b) so much of a lump sum payable under regulation 3.E.16 as is calculated under regulation 3.E.18(2).

(3) Paragraph (4) applies if the person who is the Scheme administrator for the purposes of section 206 of the 2004 Act (“the administrator”) is liable for tax under that section in respect of a pension protection lump sum death benefit.

(4) The administrator may deduct from the lump sum the tax payable in respect of it.

(1)

1971 c. 56.

(2)

1965 c. 32.