What happens when I die?
What happens if I die while I am a Member?
If you die in service while you are paying in to PACE, you are covered for life assurance.
The lump sum is payable by the Trustees under discretionary trust and so will not usually be liable for inheritance tax. However, a tax charge may be payable if the lump sum exceeds the limit laid down in the Tax Rules (see the section on Tax Rules for more information).
You should let the Trustees know, on a nomination form (available from the Group Pensions team or by downloading the attachment below) or by letter, who you would like to receive some or all of the lump sum benefit. Please keep your nomination form up to date as your circumstances change. The Trustees will take note of your wishes but will not be bound by them.
In addition to life assurance, a pension will be paid if you have a Qualifying Partner. This will be:
- 50% of the pension you built up before your death and
- 50% of the pension you would have received based on your Revalued Pensionable Earnings and half of the period from the date of your death to your Normal Pension Age.
Example:
| Your Pension | Qualifying Partner's Pension |
|---|---|
| PACE pension built up to date of death = | £2,200.00 x 50% = £1,100.00 |
| Revalued Pensionable Earnings at date of death = £13,500.00 Half of the period from date of death to Normal Pension Age = 7.5 years |
£13,500.00 ÷ 60 x 7.5 x 50% = £843.75 |
| Total | £1,943.75 |
However, if your Qualifying Partner is 10 or more years younger than you, the pension will be reduced.
If you do not have a Qualifying Partner, the Trustees may pay a pension to any financial dependant(s) which may include your children.
If you have any Qualifying Children, a pension equal to one third of the Qualifying Partner’s pension will be payable (regardless of whether you have a Qualifying Partner). This will not be payable if a pension is paid to any financial dependant(s) as described above where there is no Qualifying Partner.
If you are a Former Scheme Member, the pension payable to a Qualifying Partner will not be less than the spouse’s pension payable under the Former Scheme but based on your Former Scheme accrued benefits. If you require any further information, please contact the Group Pensions team.
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