Members who left the Scheme after 6 April 1978
A widow will receive benefits based on two-thirds of the member’s total weekly pension. If at the date of death, the member has been married for less than six months, widow’s benefits would be payable at the discretion of the Trustees.
If pension is taken before the member had reached age 60, it is payable at a lower rate, with an early retirement reduction. That early retirement reduction would not apply to the calculation of widow’s pensions.
Once in payment, a widow’s pension is payable for her life and would not cease should she re-marry.
The position in the event of the death of a Scheme member who was divorced depends on any legal arrangements which might have been agreed between the couple at the time of the divorce. The section on divorce gives more information. Generally speaking, following a divorce, there would be no spouse’s benefits payable to the former spouse on the death of a member.
The widows and widowers of members who contributed to the MPS after 5 April 1978 may also have a Guaranteed Minimum Pension (GMP) entitlement. For widows, this will be half of the member’s GMP. For widowers, the entitlement will be half of the member’s GMP arising from service after 6 April 1988. The GMP is a minimum level of pension, which replaces a comparable benefit otherwise payable from the State. There is more information about GMPs in the section Retirement Income.
From April 2006, changes introduced by HMRC allow increased flexibility in how lump sum death benefits can be taken. Any GMP element can only be paid as a widow’s or widower’s pension. This is because the GMP is a pension that is paid in place of a State benefit, the State Earnings Related Pension Scheme (SERPS), or the State Second Pension (S2P). If the benefits due from MPS exceed the level of the GMP, the excess can be converted into a cash lump sum, provided the lump sum is below the limit of the unused balance of the deceased member’s Lifetime Allowance. Any lump sum death benefit paid above that level would be taxed at the rate of 55%.
A lump sum death benefit can only be paid where a member is under the age of 75 at the date of death. After a member reaches that age, any benefits due on their later death can only be paid as a pension. There is more information about HMRC’s April 2006 changes in the section Deferred Pensioners.
Taking a cash lump sum instead of a pension may not be in the best financial interests of dependants, who may have to live on the income for many years. The Trustees strongly recommend that dependants take financial advice before deciding whether to take cash from the Scheme instead of pension income.
Leavers before 6 April 1988
There is generally no entitlement to widowers’ pension for the husbands of female Scheme members who left the Scheme before April 1988. The Administration Office will be able to confirm whether a pension is payable.
Leavers after 6 April 1988
Where a female Scheme member contributed to the Scheme after April 1988, and died on or after 6 April 1989, benefits are payable to her widower. The benefits payable are calculated in the same way as widow’s benefits.
The Civil Partnership Act 2004 came into force on 5 December 2005. Since then, same-sex couples in the UK have been able to enter into a legally recognised relationship which gives a registered civil partner rights and responsibilities similar to those of spouses, including rights to pension scheme benefits. Benefits payable to a qualifying surviving civil partner would be payable on the same basis as the benefits payable to MPS widowers.
The Rules give the Trustees some discretion on deciding how to pay particular benefits in certain circumstances. This includes the payment of dependant’s benefits on the death of a Scheme member. These benefits may be payable, depending on the circumstances, where an unmarried couple were living together as partners. The Trustees will take full account of all relevant information provided about a member’s circumstances in making a decision on the payment of discretionary Scheme benefits.
Benefits may also be paid, at the Trustees’ discretion, for the duration of the child’s education, to a claimant who had care of the member’s children at the time of his death, or to anyone (except someone already entitled to a child’s pension from the Scheme) who was wholly or mainly maintained by the member. The Trustees can review these discretionary benefits if a dependant’s circumstances change.
Establishing entitlement to benefit on death – alternative beneficiaries
Where a couple are legally married, it is relatively straightforward to establish entitlement to benefit following the member’s death by asking to see the marriage certificate.
This is not possible, of course, where a couple who were unmarried were living together as partners. In such cases, we ask to see supporting evidence of the relationship and of the claimant’s financial dependency on the Scheme member. This could include confirmation of a shared bank account, letters, and utility bills addressed to both parties at the same address. We may also arrange for a visit from a representative of CISWO (the Coal Industry Social Welfare Organisation), as often a claimant may prefer to speak personally to give details of their circumstances.
In the interests of security, many people routinely destroy bank statements and other paperwork. However, if you are living with a partner who would wish to make a claim for dependant’s benefit in the event of your death, you should consider whether there would be sufficient information to support their claim.
Children under 16, including a child born following a member’s death, a legally adopted child, or a child for whose care and maintenance the member was responsible, may be entitled to receive a pension. Any disabled children, permanently incapable of supporting themselves, may receive a pension for life. Otherwise, pensions to children cease when they reach age 16 unless they are in full time education in which case payment will continue as long as education continues, up to a maximum age of 21.
It is important that we are notified as soon as education ceases because any overpayment will be repayable to the Scheme.
Children’s payments form part of their taxable income. Children’s pensions are normally paid to an adult, usually the surviving parent, for the child’s benefit. They do not form part of the taxable income of the parent as the law currently stands provided the income is the entitlement of the child, and is used for that child’s benefit.
Lump sums on death
If there is no dependant’s pension entitlement following a member’s death, we check to see whether the payments due, or payable, to the member represented the full value of his contributions to the Scheme. If not, and balance, usually a small lump sum, will be paid to the member’s widow, or his estate.
If you left after 6 April 1975 and benefits were not in payment at the date of death, your widow or next of kin would be entitled to a lump sum equal to the higher of three years’ worth of pension or the value of your contributions, plus interest.
Pensioners in payment
If you left after 6 April 1975, payments are guaranteed for five years from the date your pension is put into payment. If you die within five years of starting to draw your pension, any remaining instalments of pension due but unpaid are payable as a lump sum.
Other than in circumstances where benefits are paid in excess of your Lifetime Allowance, under current tax law, none of these lump sums would be subject to tax on payment by the Trustees. Payments made to your estate may, however, be assessed to Inheritance Tax as part of the estate.