RPSM10104110 – Technical Pages: Death benefits: Pensions: Dependants' scheme pension

A dependants’ scheme pension

A dependants’ scheme pension may be provided

• under both a money purchase arrangement (see RPSM10104120), and a definedbenefits arrangement, and
• through the involvement of an insurance company - so a dependants’ scheme pension may be paid either by the scheme administrator of the registered pensionscheme providing the pension or, if the scheme liability is secured through an annuity contract, the insurance company underwriting that contract - see RPSM09101230).
  
  

A dependants’ scheme pension

• does not have to be paid for the life of the dependant (and may be stopped at any time, subject to the terms of the scheme rules or contract),
• does not have to be paid annually,
• may be reduced at any time (again, subject to the terms of the contract), but

is subject to certain limits where coming into payment following the death of a member when aged 75 or over (see RPSM10104130 to RPSM10104150).

A dependants’ scheme pension

• may not be guaranteed for a term certain (see RPSM09101280),
• may not be given pension protection (see RPSM09101290),
• may not generate payment of a pension commencement lump sum when the entitlement to that dependants’ annuity actually arises (see RPSM09101240), and
• may not give rise to any further benefit on the death of the dependant.

The arising entitlement to a dependants’ scheme pension does not trigger a lifetimeallowance test.

Payment of a dependants’ scheme pension

A dependants’ scheme pension does not have to come into payment immediately following the death of the member. There is no objection to a scheme or contract allowing a dependant to defer any dependants’ scheme pension to a later date.

Taxation

A dependants’ scheme pension is taxable as ‘pension income’ on the recipient through PAYE (see RPSM04101020).