SCHEDULES
SCHEDULE 14Lump sum on death
Interpretation1
In this Schedule, the words and expressions listed in column 1 of the table have the meaning given by the corresponding entry in column 2.
Column 1 | Column 2 |
|---|---|
Word or expression | Meaning |
re-employed pensioner | A person (P) who, at P's date of death, was both—
|
partial retirement pensioner | a person (P) who, at P's date of death was both—
|
earnings reference period | the period ending on—
|
recent leaver | a person—
|
relevant earnings | where the member (M) has—
|
Death of active member2
1
Except where paragraph 6 or 7 applies, a lump sum on death is payable under this paragraph in respect of the death of an active member before the member reaches the age of 75.
2
The amount of the lump sum on death payable is equal to the higher of—
a
twice the member's relevant earnings; or
b
twice the member's re-valued pensionable earnings for the scheme year falling in the earnings reference period which has the largest re-valued pensionable earnings.
3
Re-valued pensionable earnings must be construed in accordance with paragraph 7(3).
Death of deferred member3
1
A lump sum on death is payable under this paragraph in respect of the death of a deferred member F1who is not also an active member before the member reaches the age of 75.
2
The amount of the lump sum on death payable is equal to 2.025 times the amount of the member's deferred annual pension.
Death of pensioner member4
1
Except where paragraph 6 or 7 applies, a lump sum on death is payable under this paragraph in respect of the death of a pensioner member (P).
2
The amount of the lump sum on death payable is equal to the lesser of—
a
five times the annual rate of pension (excluding any element in respect of additional pension), less the amount of the pension payments already made to the member; and
b
the amount that would have been payable under paragraph 2 had the member died on the member's last day of pensionable service, 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 77.
3
If P exercised the option under regulation 51, for the purposes of sub-paragraph (2)(a), the reference 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.
Death of recent leaver5
1
A lump sum on death is payable under this paragraph in respect of the death of a recent leaver before the person reaches the age of 75.
2
The amount of the lump sum on death payable is equal to 2.025 times the amount of the deferred annual pension to which the recent leaver would have been entitled had that pension been calculated by reference to the pensionable service the recent leaver was entitled to count in the employment that has ceased.
Death of re-employed pensioner6
1
A lump sum on death is payable under this paragraph in respect of the death of a re-employed pensioner (P).
2
The lump sum is an amount equal to the sum of—
a
five times the annual rate of the relevant pension; and
b
the amount found by virtue of paragraph 4(2) in respect of each pension to which P has been entitled for less than 5 years.
3
The relevant pension is—
a
if P dies before reaching normal pension age, a Tier 2 IHP (within the meaning of regulation 90);
b
if P dies on or after reaching normal pension age, a pension to which P would have been entitled under regulation 73 at the date of death.
4
If P exercised the option under regulation 51, for the purposes of sub-paragraph (2)(b), the reference in paragraph 4(2) 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.
Death of partial retirement pensioner7
1
A lump sum on death is payable under this paragraph in respect of the death of a partial retirement pensioner.
2
The amount of the lump sum on death payable is equal to the sum of—
a
the appropriate fraction of an amount that is the better of—
i
twice the member's relevant earnings; and
ii
twice the member's re-valued pensionable earnings for the scheme year falling in the earnings reference period which has the largest re-valued pensionable earnings; and
b
the lesser of—
i
the total of the amounts found by virtue of paragraph 4(2)(a) for each pension drawn down under regulation 84; and
ii
the appropriate fraction of an amount that is the better of—
aa
twice the member's re-valued pensionable earnings for the period of 12 months ending on the date on which the member last exercised the option under regulation 84; and
bb
twice the member's re-valued pensionable earnings for the scheme year falling in the earnings reference period which has the largest re-valued pensionable earnings,
less any lump sum paid to the member in exchange for pension under regulation 77 as a result of the member exercising the option under regulation 84.
3
In this paragraph—
“appropriate fraction” means—
where—
DPS is, where the member continues in pensionable service as an active member on the election day (or the last such election day if the option has been exercised more than once), the total number of days of pensionable service which do not relate to the specified percentage of pension at the election day; and
TDPS is the aggregate of DPS and the total number of days of pensionable service (at the election day or the last such election day if the option has been exercised more than once) which relate to the specified percentage of pension payable;
“election day” has the meaning given in regulation 84;
F2“re-valued pensionable earnings” means, in relation to a scheme year, an amount equal to the actual pensionable earnings for the year increased by the same amount as that by which an annual pension equal to that amount would have been increased for the first time under the Pensions (Increase) Act 1971 at the relevant day if—
- a
the pension was eligible to be so increased;
- b
the beginning date for the pension was the first day of the following scheme year; and
- c
the relevant day was the member’s last day of pensionable service.
- a
Death of pension credit member8
1
A lump sum on death is payable under this paragraph in respect of the death of a pension credit member.
2
Paragraph (1) does not apply if—
a
the pension credit member dies after benefits attributable to the pension credit have become payable; and
b
the death occurs more than five years after the member's pension becomes payable.
3
If the pension credit member dies before benefits derived from the credit have become payable, the amount of the lump sum is equal to 2.025 times the amount of the annual pension to which the pension credit member would have been entitled under regulation 76 if the member had reached whichever is the later of age 65 or state pension age on the date of death.
4
If the pension credit member dies after a pension under regulation 76 has become payable, the amount of the lump sum is equal to the lesser of amount A and amount B minus any lump sum paid to the pension credit member when the pension came into payment as a result of the member exercising the option under regulation 77.
5
For the purposes of sub-paragraph (4)—
a
amount A is an amount which is five times the annual amount of pension payable to the member at the date of death, less the amount of the pension payments already made to the member;
b
amount B is the amount which is the higher of—
i
twice the pension debit member's re-valued pensionable earnings for the period of 12 months ending on the valuation day; and
ii
twice the pension debit member's re-valued pensionable earnings for the scheme year falling in the earnings reference period which has the largest re-valued pensionable earnings.
6
In this paragraph—
“annual amount of pension” means the sum of—
- a
the annual rate of pension payable to the member as at the beginning date for that pension; and
- b
the increase (if any) in that annual rate under the Pensions (Increase) Act 1971 M1 payable as at the date of death;
- a
“the beginning date”, in relation to a pension, has the meaning given by section 8(2A) of the Pensions (Increase) Act 1971 M2;
“valuation day” means the day referred to in section 29(7) of the 1999 Act.
Payment of lump sums on death9
1
A lump sum payable under paragraphs 1 to 8 must be paid in accordance with this paragraph.
2
The lump sum must be paid to the member's personal representatives, except so far as it is payable to a different person or body under sub-paragraph (4) or (6).
3
A member may give notice to the scheme manager—
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 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 has—
a
given notice under sub-paragraph (3) specifying a person; and
b
not revoked that notice,
the lump sum (or, as the case may be, the percentage of it specified in respect of the person) may be paid to the person unless sub-paragraph (5) or (7) applies.
5
This sub-paragraph applies if—
a
the person specified in the notice has died before the payment can be made; or
b
the payment to that person is not, in the opinion of the scheme manager, reasonably practicable.
6
If the member—
a
leaves a surviving adult dependant; and
b
has not given notice under sub-paragraph (3) or has revoked any notice so given,
the lump sum may be paid to that person unless sub-paragraph (7) applies.
7
This sub-paragraph applies if the person to whom the lump sum (or a specified percentage of the lump sum) would otherwise be payable has been convicted of an offence specified in paragraph 12 of Schedule 3 (forfeiture of rights to benefits) 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 sub-paragraph (3)—
a
must be given in writing; and
b
may be revoked at any time by a further notice in writing.
9
The scheme manager may pay the lump sum to any person claiming to be the member's personal representative or otherwise to fall within sub-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 M3 as the amount to be treated as substituted for references to £500 in section 1 of that Act.
10
The prohibition on assignment of benefits in paragraph 10 of Schedule 3 does not apply to an assignment by personal representatives under this paragraph.