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TPT Retirement Solutions
FAQs

What happens to my DB pension if I pass away after my pension starts? (SHPS and SHAPS)

CATEGORIES:

  • Members
  • DB Online
  • Payments

If you pass away after your pension has started, the benefits payable are:

 

Lump sum

If you pass away within the first five years of your retirement, a lump sum will normally be payable for the balance of the five-year guarantee period. The remaining balance of the five years of payments will be paid as a lump sum.

For example, if you were receiving a pension of £1,000 per year and you passed away after two years, there would be three years of the five-year guarantee remaining. The lump sum death benefit in this example would be £3,000.

 

Survivor’s pension

A survivor’s pension of 50% of your pension will be payable if you did not choose the Enhanced option when you retired, subject to the eligibility requirements of the Scheme. This will be calculated using the survivor’s pension quoted to you when you retired and any increases that have applied to your pension. If you chose the Enhanced option at retirement, no survivors pension is payable under the option, although an amount may still be payable to your legal spouse.

If you were in the scheme before 6 April 2016, you may have been ‘contracted out’ of the Additional State Pension. If you were contracted out for service before 6 April 1997, a Guaranteed Minimum Pension (GMP) may be payable to your legal spouse, if you have one.

Details of who can be nominated for the Survivors Pension can be seen in the Nominees for death benefits section of your scheme member guide. If your survivor is more than ten years younger than you, the survivor’s pension will be reduced by 2.5% for each year of age difference above ten years. 

If you were a reduced rate member your benefits will differ. Except for legal spouses, the Trustee will need to confirm that the nominee for a survivor’s pension meets the relevant eligibility requirements at the date of your death.

 

Children’s pensions

A pension of 12.5% of your pension (calculated on your full pension before you took any tax-free cash and including your increases to the date of your death) will be payable to each of up to four eligible dependent children. For further information regarding the eligibility criteria for children’s pensions, please refer to your scheme member guide.

The payment of death benefits is at the discretion of the Trustee. To help the Trustee understand your wishes, it is important to keep your nomination details up to date through DB Online or by completing and returning a Nomination Form.