RPSM10301050 - Scheme Administrator Pages: Death benefits: Dependants’ unsecured pension: Short-term annuity contract

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

Dependants’ short-term annuity contract

A dependants’ short-term annuity contract may be purchased subject to certain provisions as described in RPSM10104490. The scheme administrator must consider the level of dependants’ unsecured pension already provided for that dependant under the relevant arrangement in the pension year, whether paid direct as income withdrawal or through other dependants’ short-term contracts previously purchased from that fund. The scheme administrator also needs to consider any income which will be provided under those existing dependants’ short term annuity contracts later in the pension year. The scheme administrator also has to consider the position for future pension years

Where the value of the dependants’ unsecured pension that will accrue in future under a dependants’ short-term annuity contract is not clear the scheme administrator may, for example, decide to hold back payments until nearer the end of the pension year when the position is clear, then pay a ‘top-up’ income withdrawal payment towards the end of that pension year.

RPSM09102130 deals with the taxation position where the limit is exceeded in a pension year.