A lump sum is payable if you die whilst contributing to the NHS pension scheme. Additionally, depending on your circumstances, an ongoing adult dependant pension may be payable as well as an allowance for any eligible children (usually payable up to age 23).
The lump sum is payable to your spouse/registered/nominated partner automatically or you can nominate someone else to receive it.
If you have no spouse/registered/nominated partner and have not made a nomination, the benefit will be paid into your estate.
Am I covered for death in service benefits?
If you are an NHS Officer working under a whole time or part time employment contact or a Type 1 or Type 2 Practitioner and you die, then the pension scheme will pay benefits to your estate on the basis that you had died in service.
The position for other groups may be slightly different and some of these are covered below.
If you work exclusively as a GP locum, you will only be covered for death in service benefits if you die whilst working and contributing to the scheme. Read more in our pensions guidance for locums. If you die on a day when you are not working or contributing to the scheme you will be entitled to death in deferment benefits in relation to benefits already accrued in the 1995/2008/2015 schemes.
As with GP locums you will only be covered for death in service benefits if you die whilst working and contributing to the scheme. If you die on a day when you are not working or contributing to the scheme you will be entitled to death in deferment benefits in relation to benefits already accrued in the 1995/2008/2015 schemes.
If you choose to continue contributing to the scheme during your period of authorised leave then you will be covered for the death in service benefits for a period of up to two years (the maximum period of authorised leave available).
If you decide not to contribute then you will be considered a deferred member and be subject to a different level of benefits.
You are covered for death in service whilst still under a contract of employment despite not being able to pay contributions. Benefits will be calculated as if you had died in pensionable service on the day before your earnings ceased.
You are covered for death in service whilst contributing to the scheme, even during period of nil pay, and if you choose not to contribute will be treated as if you had died in pensionable service on the last day before your pensionable earnings ceased whilst you remain under contract.
If you have not yet drawn your pension, a death in service lump sum based on twice your actual annual pay would be payable. This is even if you are not paying into the scheme as a result of reaching maximum service limits.
From 1 October 2023 MHOs have been able to resume pensionable service in the 2015 scheme having accessed benefits from the 1995 section despite reaching maximum service.
You are covered for a death in service lump sum and dependants benefits in relation to the proportion of pension yet to be taken. In relation to the benefits already accessed a lump sum may be payable if the pension has been in payment for less than 5 years and dependant benefits will also be payable based on the pension in payment.
The lump sum payable on a return to pensionable employment, in respect of death in service, is based on 5 times the accrued pension built up. In relation to the benefits already accessed a lump sum may be payable if the pension has been in payment for less than 5 years and dependant benefits will also be payable based on the pension in payment.
Is a lump sum payable if you die in pensionable service?
A lump sum is payable if you die in service no matter how long you have been in the scheme for. For those active in the 2015 scheme since 1 April 2022 with earlier service in the 1995/2008 sections a death in service lump sum is only payable from the 2015 scheme as active service is no longer possible in the 1995/2008 sections.
A lump sum of twice your relevant earnings in the last 12 months or revalued relevant earnings in one of the last 10 years (if higher) is payable directly to your widow/widower/civil partner/nominated partner in the event of your death whilst still contributing to the NHS pension scheme.
This is payable into your estate if you are unmarried or have not made a nomination.
The above also applies if you have transitioned to the 2015 scheme from the 1995 or 2008 section.
The lump sum will be based on your pro-rated pensionable salary and not the whole-time equivalent.
The lump sum payable on death in deferment will be based on the annual pension you would have received had you retired on the date of death as follows:
- 1995 section: a lump sum of 3x your annual pension is payable
- 2008 section: a lump sum of 2.25x your annual pension is payable
- 2015 scheme: a lump sum of 2.025x your annual pension is payable.
If you have transitioned to the 2015 scheme before opting out, the death in deferment lump sum will be based on all of your preserved pensions and not just the 2015 scheme accrual.
If you take 100% of your pension and return to pensionable employment in the 2015 scheme after a break the lump sum on death in pensionable service will be based on two parts. Five times your accrued pension from pensionable re-employment plus any payment due if you die within 5 years of having accessed 100% of your pension.
This is capped at no more than twice your actual pensionable pay and so if any lump sum paid at your original retirement exceeds this then no further lump sum is payable.
If you have taken partial retirement the lump sum payable on death in pensionable service will be based on two parts.
In relation to in service benefits - a payment equivalent to twice your actual pay will be payable based on the proportion of pension yet to be accessed as a death in service payment.
In relation to post-retirement benefits, a payment may be due if you die within 5 years of having partially accessed your pension. This latter part is based on the lesser of 5 times your pension less the pension already paid or twice the actual pensionable pay used to calculate the last partial retirement pension (proportionate to the amount of pension accessed).
As a general guide, any amount paid as an NHS lump sum on death in service is:
- not normally included in an inheritance tax assessment if a member is married or in a registered civil partnership and payment is made to the deceased member's legal spouse or registered civil partner as of right
- subject to inheritance tax if the member is single or if it is paid to a nominee or a qualifying nominated partner.
In all circumstances, any lump sum must be paid within two years of the date that the scheme was first notified of the member’s death. After two years the lump sum will be subject to a tax charge of up to 45%.
If the payment caused you to exceed the lifetime allowance then the excess will be subject to a tax charge. Please refer to the lifetime allowance guidance for more information on the charges payable.
Your beneficiary was legally responsible for paying any lifetime allowance charge that may be due.
From 6 April 2024 the LTA will be abolished and the LTA allowance will no longer be tested for. Instead a new threshold will be created called the Lump Sum and Death Benefit Allowance set at the current LTA rate of £1,073,100. It is expected that all tax free pension lump sums will be included in this threshold. Unless this is exceeded most lump sums on death will not be taxable unless paid more than two years after the date of death when it will be taxed at the recipients marginal rate of tax.
Whenever a lump sum is payable, the relevant pensions agency will inform your legal representative of the amount and from 6 April 2024 will need to assess how much of the Lump Sum and Death Benefit allowance has been used. Your legal representative is responsible for notifying this figure to the HMRC if there is any tax due at the recipients marginal rate of tax.
Your beneficiary is legally responsible for paying any tax that may be due.
Where an individual receives the payment they are classed as qualifying and any tax due is at the individuals marginal income tax rate. Where an entity or an individual acting as an entity (e.g. a trustee) receives the payment they are classed an non-qualifying and the payment will be subject to 45% tax.
Read further guidance on the definition of qualifying and non-qualifying.
Can I choose who gets my lump sum?
If you are married or in a registered civil partnership your partner will qualify automatically.
If you do not want the payment to go to your spouse or civil partner you can nominate another person(s) or institution to receive the payment. Alternatively, the payment can be shared between multiple parties.
A form will need to be completed should you wish to nominate another person(s) or institution to receive the death lump sum payment:
- if you contribute to the NHS pension scheme in England and Wales
- if you contribute to the NHS superannuation scheme in Scotland
- if you contribute to the HSC pension scheme in Northern Ireland.
If you are not married or in a registered partnership you can nominate your partner to receive the payment. A form should ideally be completed:
- if you contribute to the NHS pension scheme in England and Wales
- if you contribute to the NHS superannuation scheme in Scotland
- if you contribute to the HSC pension scheme in Northern Ireland.
If you are not married or in a registered partnership and you have not nominated a qualifying partner to receive the payment, you can elect others to receive this payment. This includes children or one organisation (including a bank, trustee or firm of solicitors).
The payment will then be paid to the nominees automatically without waiting for grant of probate or letters of administration.
If the nominee is a child then the claim forms will be sent to the child's legal guardian.
If no election is made, a payment will still be due and the money will be paid into your estate. It will potentially be subject to inheritance tax.
Qualifying for an adult dependant pension
A widow/widower/registered partner pension is payable in the event of your death in service, in addition to the death in service lump sum detailed above.
Since 1 April 2019, 1995 section benefits payable to a widower and registered civil partner, where death occurred after 5 December 2005, will be based on all service.
Deaths which occurred prior to that date will continue to have widower benefits based only on service from 6 April 1988 onwards.
In order to qualify for a partner pension your nominated partner needs to meet certain criteria, both at the time of the nomination and at the time of your death in service.
The criteria includes being in a mutually exclusive long term relationship (of at least two years) with financial dependency or interdependency. You will need to have been able to marry or enter a registered civil partnership had you wanted to. The validity of the nomination is tested at the time of death.
The form to nominate your unmarried partner to receive this benefit is available from the following agencies:
- if you contribute to the NHS pension scheme in England and Wales
- if you contribute to the NHS superannuation scheme in Scotland
- if you contribute to the HSC pension scheme in Northern Ireland.
Whilst it is no longer a requirement to have completed a nomination form for an unmarried partner it is best practice to do so.
Nominated partners in relation to 1995 section will continue to have benefits based only on service since 6 April 1988.
If you have transitioned to the 2015 scheme from the 1995/2008 section, benefits will only be payable in relation to your service/earnings in the 2015 scheme.
The death in service payment looks at earnings in the 2015 scheme only.
1995/2008 section benefits are only payable in respect of the ongoing long term dependants pension but will be payable without any enhancement.
Your adult dependant is only entitled to a short term pension unless you are over the scheme’s normal pension age.
This is state pension age in the 2015 scheme.
A pension may, however, be payable from the state.
Your adult dependant is eligible to a short term and a long term pension.
The pension your adult dependant will receive short term
A short term pension, payable for six months only, may be the only ongoing pension paid if you have been in the NHS pension scheme for less than two years and you die under your normal pension age. If you have transitioned from the 1995/2008 sections this period counts towards your two years in the 2015 scheme.
This is paid directly to your widow/widower/registered/ nominated partner by your employer or pensions agency on receipt of the death certificate.
For the first six months, a payment equal to your rate of pensionable earnings (for GPs this is based on the rate of pensionable earnings during the last complete quarter before death) is payable.
The pension your adult dependant will receive long term
The following outlines the benefits your adult dependent will receive after the initial short term pension.
If your service has been for a total of less than two calendar years, there is no further ongoing pension payable to an adult dependent after the short term pension detailed above.
An exception to this is if you die over the normal pension age of the scheme you are a member of.
The long term pension is paid directly to your widow/widower/registered partner/nominated partner by the pensions agency on receipt of the appropriate application form. The form is available from your employer.
The long term pension, for members with service since 1 April 2008, is payable for life regardless of any remarriage or cohabitation the adult dependent may enter into.
If you die under your state pension age, the long term pension is based on 33.75% of the tier 2 ill health retirement pension that you would have received had you retired on health grounds as at the date of death.
A tier 2 pension is usually enhanced by half of your prospective service until your state pension age, so the pension will be based on an enhanced amount.
If you are over your state pension age, the 'long term' pension will be based on your actual pension with no ill health enhancement.
If you are in receipt of draw down benefits, the ‘long term’ pension will be calculated as per the rules for death in service (in relation to your ongoing active pensionable service) and death after retirement (in relation to the drawn down benefits).
Child allowance
If your children qualify at the time of your death, they will each be entitled to a child’s allowance.
Child allowance payments are payable until your child reaches age 23, unless they are unable to live independently, then they will be paid for life.
In order to qualify they will need to be financially dependent on you and be:
- under age 23
- over age 23 but unable to earn a living due to a permanent physical or mental condition present at your time of death.
A child can include:
- your biological child
- an adopted child
- a step child
- a child of your civil or nominated qualifying partner
- a grandchild
- any dependent child
- a nephew or a niece.
The amount payable to your qualifying children will depend on whether a widow/widower/registered partner or nominated partner pension is also payable.
If a payment is also being made to a partner, each child is entitled to 16.875% of the pre-commutation tier 2 pension payable had you retired on health grounds at the date of death. A maximum of 33.75% of the tier 2 pension is payable to two or more children.
Where no payment is being made to a partner, each child is entitled to 22.49% of the pre-commutation tier 2 pension payable had you retired on health grounds as at the date of death.
A maximum of 44.98% of the tier 2 pension is payable to two or more children.
The child allowance is payable irrespective of your length of service and is calculated on a minimum of 10 years’ service where service has not been this long.
If your child is in the care of an adult dependant partner who is in receipt of a short term pension, the child allowance will start from the day after the short term pension ends. This is six months after the date of death.
If an adult dependant partner pension is payable but your child is not in that person’s care, your child will receive a short-term pension payable for three months, followed by the child allowance thereafter.
Where no adult dependant partner pension is payable, the short term pension is payable for six months to your child. Thereafter, the child allowance becomes payable.
If your child, as result of mental or physical impairment present at the time of your death, is unable to support themselves, the child allowance can be paid for life.
You are able to allocate a maximum of a third of your pension to a dependent which will be payable in addition to the benefits outlined above.
You are able to purchase additional pension which can include additional dependent’s benefits.
If you had a contract to purchase added years or additional pension in place for a year or more, the full contract is paid up on death before your normal pension age.
The dependent benefits from the 2008 section and the 2015 scheme equate to those provided by the 1995 section.