Death benefits

Registered pension schemes can pay a variety of benefits on the death of a member and on the subsequent death of a dependant, nominee or successor. The type of benefit that can be paid will depend on whether the payment is from uncrystallised or crystallised funds. It will also depend on the type of pension arrangement the member’s benefits are held in, the scheme rules or the product’s terms and conditions.

This guide covers the death benefits that are currently allowable under the legislation from registered money purchase pension schemes. It doesn’t cover the death benefit rules for defined benefit schemes, nor does it cover the treatment of contracted-out benefits (GMP and Reference Scheme Test benefits).

Read our Death benefits guide to learn about:

Death benefits
The two year rule
Dependants, nominees, successors and non-qualifying persons
Death benefits and the lump sum and death benefits allowance
Payment of the death benefits
Trusts and death benefits
Inheritance tax
The charity lump sum death benefit

Read the Death benefits guide

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Learning objectives

Be able to explain the payments available from registered money purchase pension schemes when a member dies.
Be able to explain the two year rule.
Know the difference between dependents, nominees, successors and non-qualifying persons.
Build a knowledge and awareness of the legislative and tax landscape surrounding death benefits.
Understand how and when death benefits are paid.

The information on this page is based on our understanding of legislation as at 6 April 2024.

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Question 1: If a member dies aged 75 or older, what death benefits are available from continuing annuities?

Any beneficiary can receive payments tax free, if the member died on or after 3 December 2014

Any beneficiary can receive the payments at their marginal rate of tax

Any beneficiary can receive payments tax free, if the member died on or after 3 December 2014 and no payment is made before 6 April 2015

Any beneficiary can receive payments tax free

Question 2: What is the Inheritance Tax nil rate band for the 2024/25 tax year?

£325,000

£500,000

£30,000

Question 3: For a charity lump sum benefit to be paid, who can nominate the charity?

Only the member

Only the scheme administrator

The member, dependant, nominee or successor

The member or the scheme administrator

Question 4: A trivial commutation lump sum death benefit can be paid to a dependant instead of a small dependant's pension if the value of that pension is not more than:

£45,000

£35,000

£30,000

Continuous Professional Development

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CPD credit: 30 CPD mins

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Death benefits

Completed on: 20 July 2023
CPD credit: 30 CPD mins

CPD Learning covered

Be able to explain the payments available from registered money purchase pension schemes when a member dies.
Be able to explain the two year rule.
Know the difference between dependents, nominees, successors and non-qualifying persons.
Build a knowledge and awareness of the legislative and tax landscape surrounding death benefits.
Understand how and when death benefits are paid.

Article Death benefits

Learning objectives

Test your knowledge

Certificate of completion

The User

CPD Learning covered