RPSM10104140 - Technical Pages: Death benefits: Pensions: Dependants' scheme pension: How the limit is applied: the post- death year and subsequent years

How the limit on the level of dependants’ scheme pension payable is applied: the post-death year and subsequent years

Where the circumstances described on page RPSM10104130 apply, the legislation applies a limit to the amount of dependants’ scheme pension that may be paid in respect of a member’s arrangement, both for the year immediately following the member’s death (the post-death year) and also for subsequent years.

This ensures that the limit which is applied to the amount of pension that may be paid to any dependants of the member in the year following the member’s death (‘the post-death year’) cannot be circumvented by significantly increasing the dependants’ pensions more than 12 months after the member’s death.

But this limit increases recognising that schemes may want, for example, to provide for cost of living increases in the pensions paid to dependants.

If in any period the level of dependants’ scheme pension exceeds the limit (the ‘initial member pension limit’ or ‘current member pension limit’ - see RPSM10104190), the excess will not be a dependants’ scheme pension for the purpose of the pension death benefit rules and will be an unauthorised member payment (see RPSM10100120).