Death
The pension arrangements we operate are extremely flexible and offer a wide choice of benefit options on death. There is no requirement to decide at outset what option to take. This flexibility allows your beneficiaries to choose the most tax efficient option to suit their needs.
We always strongly suggest you or your beneficiaries take advice from a professional financial adviser before commencing to receive benefits.
The range of benefit options available on death from IPS's pension arrangements can briefly be summarised:
If you die before age 75 and have not drawn retirement benefits, the choices are:
- Pay the whole fund as a tax free lump sum to your nominated beneficiaries
- Use the fund to pay a dependants pension
- Use the fund to purchase an annuity for your dependants.
If you die before age 75 but have already commenced retirement benefits, your choices are:
- Pay the fund out as a lump sum to your nominated beneficiaries minus 35% tax
- Use the fund to pay a dependants pension
- Use the fund to purchase an annuity for your dependants.
- If you are in receipt of a Scheme Pension when you die, your nominated beneficiaries can receive a lump sum calculated as the fund crystalised when Scheme Pension commenced, less the pension payments made less 35% tax. The balance of the fund can be paid to your beneficiaries but is assessed for tax which could be up to 82%. It is important that we know who you would like to receive benefits in the event of your death. Please therefore complete a Nomination of Beneficiary Form and return it to us.
It is important that we know who you would like to receive benefits in the event of your death. Please therefore complete a Nomination of Beneficiary Form and return it to us.
If you die after the age of 77, you must have already commenced retirement benefits.
If you die between the ages of 75 and 77 the benefits are payable as outlined above, if you die after age 77 the benefits payable are as follows:
a) If you have surviving dependants:
- The fund must be used to provide them with a pension as Unsecured Pension or Alternatively Secured Pension, or to purchase an annuity.
b) If you have no surviving dependants, or when your dependants die:
- The fund can be paid out tax free to a charity as nominated by you. If you have not nominated a charity, IPS can do so.
- The fund can be paid to nominated beneficiaries. This could incur tax of up to 82%.
c) If you are in receipt of a Scheme Pension when you die, the balance of any unexpired guaranteed period selected can be paid to your nominated beneficiaries, and your spouse/dependant's can receive a pension paid by annuity, Scheme Pension, Alternatively Secured Pension or Unsecured Pension. The balance of the fund can be paid to your beneficiaries but is assessed for tax which could be up to 82%.
It is important that we know who you would like to receive benefits in the event of your death. Please therefore complete an Instruction of Beneficiary Form and return it to us. Please note that if your fund exceeds the Lifetime Allowance, then Lifetime Allowance charges may also apply.
For more details on death benefit options, please read the section on death in our Guideline on Retirement Benefits.
