RPSM10104750 - Technical Pages: Death benefits: Pensions: Dependants' alternatively secured pension: Payment rules

This guidance only covers individuals who became entitled to dependants’ pension before 6 April 2011. If the member who died reached age 75 between 22 June 2010 and 5 April 2011 you should also read the guidance in RPSM17100000 onwards.

If an individual became entitled to their pension on or after 6 April 2011 then see the guidance on dependants’ drawdown pensions at RPSM10104850.

Rules which apply to the payment of a dependants’ alternatively secured pension

Generally, the same rules apply to the payment of a dependant’s alternatively secured pension as the payment of a member’s alternatively secured pension. This means that

• a maximum level of dependant’s unsecured pension payable is set at the point entitlement arises (which will either be age 75, or the point ‘designation’ occurs), and this maximum applies for the next pension year (a 12-month period),
• the maximum is calculated in exactly the same way as with a member’s alternatively secured pension,
• using the same GAD tables (see RPSM09103030 and RPSM09103060), and
• equalling 90% (or 70% for pension years beginning before 6 April 2007) of the basis amount calculated by using those tables,
• the maximum is reviewed at the beginning of each subsequent pension year, and is being calculated in the same way as described in RPSM09103060,
• for pension years beginning on or after 6 April 2007 there is a 55% (of basis amount) minimum pension requirement for each 12-month pension year, with tax charges on under-payment (see RPSM09103050 and RPSM09103150),
• any payment made which exceeds the maximum permitted is an unauthorised member payment and is taxed on the recipient of the payment in the same way as described in RPSM09103150,
• the dependant’s alternatively secured pension fund may be used at any time to purchase a dependant’s annuity (or, where the scheme allows, may be applied to provide a dependant’s scheme pension). This does not change the maximum for that pension year - see RPSM09103090, and
• dependant’s alternatively secured pension payments must stop as soon as the dependant dies - the truncated pension year created is dealt with in the same way as described in RPSM09103110.

But unlike the situation where a member entitled to alternatively secured pension died before 6 April 2007 (see RPSM09103120), the payment of a dependants’ alternatively secured pension could never be guaranteed for a term certain.

RPSM10104770 explains how any remaining dependants’ alternatively secured pension fund may be dealt with when the dependant dies.