About Your Benefits

The Scheme provides life insurance cover for deferred pensioners. The benefits which may be payable if you die before your pension starts are:

• a cash sum
• a widow’s/widower’s, civil partner's or adult dependant’s pension
• children’s allowances

Notes about the procedures on death are in the Pensions in Payment and General Information sections headed ‘Arrangements on Death’.

Death benefit cash sum

A cash sum would be paid to your estate, or to a nominated dependant if you have made an ‘election and declaration’ under Rule 28A of the Scheme (see ‘Benefits on death – making your wishes known’ in the General Information section).

If you have 10 or more years of contributing service, the amount payable will be the greater of:

• a refund of the contributions you have paid plus interest,
  
  or
  
  
• your pensionable salary at your date of leaving, plus cost of living increases to your date of death,
  
  or
  
  
• a cash sum based on 3/80ths of your pensionable salary at your date of leaving for every year of contributing service, plus cost of living increases to your date of death,
  
  or
  
  
• 1/10th of your pensionable salary at your date of leaving for every year of contributing service, up to a maximum of 4 years pensionable salary,
  
  or
  
  
• if you die within 5 years of reaching normal retirement age a cash sum, varying from 3 year's pension if you die more than 4 years before normal retirement age, to 7 year's pension if you die 1 year before normal retirement age. For this purpose, the calculation of pension is 1/80th of pensionable salary for each year of contributing service.

If you have less than 10 years contributing service, the lump sum payable will be the greater of:

• a refund of the contributions you have paid, plus interest,
  
  or
  
  
• a cash sum based on 3/80ths of your pensionable salary at your date of leaving for every year of contributing service, plus cost of living increases to your date of death
  
  or
  
  
• 1/10th of your pensionable salary at your date of leaving for every year of contributing service, up to a maximum of 4 years pensionable salary.

If you paid contributions on overtime payments, attendance bonus payments or additional attendance payments, each of the lump sum calculations above will be increased, as appropriate, by reference to the additional payments on which contributions were paid and the period of service for which they were paid.

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.

There is more information about family benefit contributions later as well as more information about dependants’ pensions in the General Information section ‘Benefits on death – making your wishes known’.

From 1 April 2006 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 cash 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/her 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 option 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.

Bonus Augmentations

The bonuses awarded following actuarial valuations also increase any pension payable in the event of your death to your widow, widower, civil partner or adult dependant.

Children’s Allowances

Children’s allowances are payable on your death to any child of yours born before the first anniversary of the date you left contributing service and 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 the 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.