Pension death benefit options became more flexible from 6 April 2015 when ‘nominee’ and ‘successor’ pensions were introduced. A catch-all term of ‘beneficiaries’ pension is now widely used to incorporate dependants, nominees and successors.
Prior to the Taxation of Pensions Act 2014, although lump sum pension death benefits could be paid to anyone, pension benefits could only be paid to a ‘dependant.’ The removal of this restriction has made pension death benefit planning far more flexible and members are advised to review their pension death benefit options if they have not done so already since April 2015.
The ability to include non-dependent children or grandchildren as nominees will be of interest to some. Not being in a registered legal partnership (marriage/civil partnership) previously had the potential to cause challenges as the dependant status of a partner relies upon “…the opinion of the scheme administrator…” (FA2004, Schedule 28 para15(3)). Unmarried partners can now be nominated by the member and not rely upon the scheme’s opinion of their dependency upon the member.