RPSM09101830 - Technical Pages: Member benefits: A secured pension: Lifetime annuity: Death benefits

Benefits that may be provided under a lifetime annuity contract on the death of the annuitant

The only benefits a lifetime annuity contract (as secured from a money purchase arrangement) can provide on the death of the annuitant are as follows

• the provision of a further annuity for any dependants of the member (referred to as a dependants’ annuity in the legislation - see RPSM10104310,
• the continuation of any member’s lifetime annuity for the term of any remaining guarantee period (see RPSM09101780), and
• the payment of an annuity protection lump sum death benefit where the member dies before their 75^t h birthday - see RPSM10105160.

More than one of the above benefits may be provided by a lifetime annuity contract on the death of the member.

Whether or not the above benefits are available on the member’s death will be a question of fact under the terms of the contract. If there is more than one dependant then each may be given a death benefit under the contract.

If a dependant’s annuity entitlement is deemed trivial it may be paid as a trivial commutation lump sum death benefit (see RPSM10105260 for more details).

Any other benefit provided on the death of the annuitant will not be an authorised member payment and will be taxed as an unauthorised member payment (chargeable on the recipient - see RPSM04104020 and RPSM04104040).