Have you sorted out who would benefit from your death?
Bringing up the subject of your death and who will benefit financially when you are gone, isn’t a conversation you are likely to feel comfortable with! It’s a subject you should not ignore, especially in light of the recent changes to the NHS Pension Scheme.
- In 1948 a quarter of British homes had no electricity
- Free State education was only provided up to the age of 15
- The British workforce was almost entirely made up of men*
The NHS Death in Service benefits naturally reflected the society of its era. At this time, your husband or wife were the ONLY people who qualified for any financial support if you died.
In the past, the Death in Service benefits failed to keep up with evolution as our families changed over the years, leaving a gaping ravine between who we all thought of as our family, and who the pension scheme might think of as ‘dependent family’ in the event of our death.
Welcome to the 21st century NHS. The NHS Death in Service benefits have finally changed with refreshing results! Values and outlooks have progressed and become more inclusive relating to our ever-changing modern society.
NHS Pension Death in Service benefits today
Irrespective of which scheme you are a member of – the 1995, 2008 or 2015 scheme – to benefit from Death in Service you no longer need to be fitting the image of ‘the other half’ befitting of the 1940s! You could be:
- Civil Partners and Married Same Sex Partners
- Qualifying Partners: providing a PN1 has been completed. Both partners have to complete the form and it has to be submitted prior to death.
To be considered a qualifying partner, all the following conditions must be satisfied at the date of your death and have existed for a continuous period of at least 2 years:
- Neither person has a legal partner i.e. a spouse or registered civil partner
- They are not related to each other in a way which would prevent marriage or registered civil partnership
- They are living together in an exclusive relationship as if they were husband and wife or civil partners
- One partner is financially dependent on the other or they are financially interdependent on each other
Essentially ‘qualifying partners’ in the 21st century get the same benefits as other legal partners. However, the qualifying partner does need to be nominated.
So, if you haven’t already completed the NHS Pension Scheme’s nomination of beneficiaries form, I’d do it ASAP. Do it today. Fill in the PN1. Just do it.
So who qualifies as a dependent?
The same criteria for Qualifying Partners is used for pensions being paid out to Widows and Widowers, and Civil Partners.
In addition, dependent ‘children’ can receive a pension until the age of 23 should they meet the criteria. A maximum of 2 children at any time can be supported in this way. Also, younger children will be supported as older ones cease to qualify.
As modern families have evolved, the definition has been updated to include a number of other possible child dependents. This includes not only your own biological children, but also children of a civil partner, adopted children and even a niece or nephew.
See the NHS Pension Scheme’s Survivors Guide for full details. At least 2 years membership must have been completed for a dependent’s pension to be payable.
Increasing your pension and buying life protection
Other recently implemented changes mean you can now buy Additional Pension to increase your NHS pension. You can also opt in or out of buying additional death or ill health pension benefits.
Buyer beware: There are differences across the 3 schemes
Make sure you know which scheme you are in: the 1995 scheme, 2008 scheme or 2015 scheme. There are differences across each regarding Death in Service and Ill Health benefits, particularly how these benefits are paid out.
Broadly speaking, Death in Service is twice your pensionable NHS pay, providing you are in ‘active pensionable employment’.
However, which scheme you are in (1995, 2008 or 2015) and your occupation (hospital doctor, GP, DGP, etc.) determines how this ‘pay’ figure is calculated. See your scheme booklet for full details.
Don’t forget, if you are a locum at the time of death, things are not so straight forward. GP locums: Will you get your death in service benefit? >
So what actually happens to my NHS Pension benefits when I die?
- If you are working in pensionable NHS employment at the time of your death, your last employer will arrange completion of the appropriate application forms.
- It is important that someone notifies the Scheme Administrator as soon as possible of your death.
- The Death in Service lump sum needs to be paid within 2 years of the date the Scheme Administrator was first notified of your death. If not, a tax charge of up to 45% will be deducted from the lump sum payment.
NHS Pension Death in Service benefits: Are they worth it?
These Death in Service benefits remain as valuable as ever. At a time when some medics question the value of their NHS Pension membership, it’s easy to overlook the basics and forget how invaluable the financial support would be for your family if you passed away.
Ensure your loved ones are taken care of by taking them into account when reviewing your protection arrangements. Make sure your family is nominated correctly and don’t forget you can update your nominations easily if your life changes.
It is important financial matters are organised and steps are put in place to reduce the stress of death within the family unit. Getting your head around the NHS Pension Scheme and its benefits is not easy. Your Legal & Medical financial adviser can help make it less painful.
Do you know who will get your NHS Pension benefits when you die? Let us know by adding a comment below.