About Your Benefits

If you are a former contributor, a pension may be payable on death to your spouse or, if there is no spouse, to a civil partner or an adult dependant. Children’s allowances may be payable if you have a qualifying child and a cash lump sum may be payable if your die within the first few years of your pension starting. If you are receiving a pension as the spouse, civil partner or adult dependant of a former contributor, or if you are in receipt of children’s allowances, no further benefits will be payable on your death.

Pensions for widows, widowers and adult dependants

If you have paid family benefit contributions, a pension for life would be paid to your widow, widower or civil partner. These pensions do not cease on re-marriage. If you do not leave a legal spouse or civil partner then an equivalent pension may be paid if there is someone who was financially dependant on you at your date of death. This could, for example, provide a pension to a partner (Trustees can recognise partners of either sex and dependant relatives provided they were financially dependant on you) or an aged parent. The Trustees must be satisfied that such a person was financially dependant and the continued payment of such a pension may be subject to review.

If you have always paid family benefit contributions, the pension would be equal to two-thirds of your pension. If you have not paid family benefit contributions to cover the full period of your membership, the pension would be reduced proportionately in accordance with the length of service for which family benefit contributions were paid.

From 1 April 2006 new taxation rules allow increased flexibility in the payment of death benefits. Pensions payable to widows, widowers, civil partners or adult dependants in excess of the Guaranteed Minimum Pension may in certain circumstances be exchanged for a lump sum death benefit instead, provided that the lump sum is below the deceased member’s unused Lifetime Allowance. Any lump sum death benefit paid in excess of the deceased member’s unused Lifetime Allowance will be taxed at the rate of 55%. Lump sum death benefits can only be paid if the member is under the age of 75 at the date of his death. After that any benefits due to survivors will be in the form of a life pension.

The trustees are offering the option for widows, widowers, civil partners and other adult dependants to take part of their pension, where allowable, as a cash lump sum. Where the options is available the administration office will alert claimants to this additional option.

Taking a cash lump sum instead of a pension may not be in the best financial interests of dependants, who may have to live on the income for many years. The trustees strongly recommend that dependants consider taking financial advice before deciding whether to take cash from the Scheme instead of pension income.

Lump sum on early death

Your pension is guaranteed for five years after your pension starts. If you die within that five year period, the balance of pension due for the remainder of that period, based on the initial rate of pension when your pension started (after any lump sum commutation for leavers after 21 June 1990) is paid as a lump sum.

The guarantee does not apply if you retired early because of ill health. The lump sum payable in the event of death following ill health retirement is the excess of up to 3 years’ pensionable salary over the benefits already paid. In either case, the lump sum is paid to your estate, or to a nominated dependant if you have made an ‘election and declaration’ under Rule 28A of the Scheme. The lump sum is payable whether or not there is any entitlement to a widow, widowers’, civil partner’s or dependant’s pension.

Bonus Augmentations

The bonuses awarded following actuarial valuations increase any pension payable to your widow, widower, civil partner, or adult dependant on your death.

Children’s Allowances

Children’s allowances may be payable in respect of a child of the deceased member. In the case of a member who left the service with a deferred pension, children allowance is not paid in respect of any child born more than 12 months after the date of leaving service. A child is someone who is:

• under age 18,
  
  or
  
  
• under age 21 and in full time education. The Trustees may allow a child’s allowance to be paid to a child who continued in full time education after age 21.
  
  or
  
  
• certified by the Scheme’s Medical Adviser as being disabled and incapable of self support and for whom you are financially responsible. The allowance so paid may be paid for life.

If a spouse, civil partner or dependant’s pension is payable, the allowance is either a minimum flat rate amount or, if greater, 20% of your pension entitlement for one child or 40% for two or more children. If a spouse, civil partner or dependant’s pension is not payable, the allowances are 40% and 80% respectively. If family benefit contributions have not been paid for the full period of your contributing service, for the purpose of this calculation, your pension entitlement will be subject to a proportionate reduction.

Children’s allowances are usually paid on behalf of the child or children to your widow or widower. If you do not leave a widow or widower, or this arrangement is not appropriate, the Trustees can decide who should receive the payment. The allowance is increased each year in line with the increases given to pensioners.

Under HMRC regulations children’s pensions must cease at age 23. However, if the child’s pension was already in payment on 6 April 2006, or payable in respect of a member who was a pensioner at 6 April 2006, the pension does not have to cease at age 23 and may continue to be paid in accordance with the provisions of the Scheme as described earlier.

Family Benefit Contributions

The payment of widows’, widowers’ and civil partners’ pensions and children’s allowances is dependent on the contributor having paid family benefit contributions. Generally, only the period for which family benefit contributions were paid counts as reckonable service for these benefits.

The provisions for the payment of family benefit contributions have changed substantially since the Scheme was established. The key provisions are:

• male contributors have always had the right to pay for family benefits on joining the Scheme
• payment of family benefit contributions was made compulsory for male contributors who were married and who joined the Scheme from 1952
• all male members were required to pay family benefit contributions from April 1978
• female contributors were given the right to pay for family benefits from April 1980 (prior to this the right only existed where the spouse or children were fully dependant on the contributor)
• facilities have been available for contributors to purchase extra years for family benefits for earlier service when family benefit contributions were not paid
• there was a contribution holiday for contributors from family benefit contributions from April 1993. Also from this date, all female contributors accrued family benefits.