Ill Health & Death Benefits

Question 1

What is an ‘ill health benefit’?

Answer 1

Benefits can be paid early on grounds of ill health.

Medical evidence is required in all cases.

Different rules for personal and workplace pensions.

Question 2

Workplace (Occupational) Schemes

True or False.

Can draw ill benefits early at discretion of trustees.

Answer 2

True.

Payments can be suspended if the member recovers and returns to work.

Question 3

Personal Schemes

Can only draw benefits early in the event the member has a life expectancy of less than 1 year

Answer 3

All uncrystallised benefits can be commuted for a lump sum.

No income tax liability if within the available lifetime allowance, provided under the age of 75.

Question 4

What is required for a nominee to access death benefits?

Answer 4

Death must be proven by sight of a death certificate.

And grant of representation / probate must be proved to prove who has the power to act on behalf of the deceased.

Proof of age (Birth certificate) may also be required

Question 5

Is medical evidence required for ill health benefits access?

Answer 5

Yes.

Question 6

What is the ‘two-year rule’ around death benefits?

Answer 6

The two year rule for death benefits states that most payments must be made within two years of the scheme administrator being told of the death. This rule applies to pension death benefits, lump sum death benefits, and beneficiary drawdowns.

Question 7

If the ‘two-year rule’ is broken what tax implications are then in place?

Answer 7

Any payments made after the two year period will be taxed at the recipient’s marginal rate of income tax.

Question 8

The person dealing with the estate must tell the pension provider within how many months of a death?

• A. 3
• B. 6
• C. 12
• D. 13

Answer 8

D. 13

The person dealing with the estate must tell the pension provider within 13 months.