RPSM10301040 - Scheme Administrator Pages: Death benefits: Calculation of the dependants’ unsecured pension

This guidance covers individuals who became entitled to dependants’ unsecured pension before 6 April 2011. For pension entitlements arising on or after 6 April 2011 see RPSM10104850.

Review of the maximum dependants’ unsecured pension fund limit where a pension sharing event occurs

If a dependants’ unsecured pension fund is reduced following the application of a pension sharing order this triggers a review of the maximum dependants’ unsecured pension payable in the remaining pension years in that five-year reference period. This review ensures that the maximum income that may be drawn from the fund takes into account the reduction in the dependants’ unsecured pension fund following the application of the pension sharing order.

The scheme administrator must re-calculate the basis amount on the day the pension sharing order comes into effect. The calculation is based on the reduced dependants’ unsecured pension fund value immediately after the pension sharing order comes into effect and the individual’s age on that day.

The revised limit applies from the start of the pension year following the pension year in which the pension sharing event occurs, and continues to apply in any remaining pension years in the five-year reference period.

A review is not triggered where the pension sharing order is put into effect in the last pension year in a five-year reference period. The application of the pension sharing order is not what the legislation calls a ‘recent pension sharing event’.

The rules are similar to those for the review of the limit on the amount of dependants’ unsecured pension payable following the purchase of a dependants’ annuity. The example given in RPSM09102470 can therefore be applied to this situation.