The rules of the scheme outline the benefits to be paid on death in service and define the classes of beneficiary who may receive these benefits, e.g. legal spouse/civil partner and dependent children.

Although the member fills in a nomination form (called an expression of wish form) stating who they would like to receive the benefits on their death, they are paid out at the discretion of the trustees.

Death in service

Lump sum:  Also known as a defined benefits lump sum death benefit and the amount that can be paid is unlimited. If the death of the member is before 75, any excess over the LTA will incur a 55% tax charge, but if the lump sum is under the LTA there is no charge.

Spouse/dependant pension: The scheme can pay an unlimited amount to a spouse, civil partner and/or dependant. The scheme rules outline benefits can be:

• A percentage of the member’s pension on a prospective service to NRA – eg 50%
• A percentage of the accrued benefits – eg 50%
• A fixed percentage of pensionable remuneration regardless of service – eg 25%

Death after retirement

Rules of the scheme determines if a payment would be made after the member has already taken the benefits from the DB scheme.

The scheme may offer a guarantee period which means the income payments will continue for the minimum stated length of time.

For example a 10 year guarantee if offered and if the member dies after 3 years, the payments would continue for another 7 years. The payment amount is usually a fixed percentage, eg 50%.

Life cover

Employers may provide separate Death in Service to avoid unexpected drains on main DB fund e.g. early deaths