Get in touch with our bereavement team to inform us of a death

As the pension plan has not been written under trust, Standard Life, as the Scheme Administrator, will decide who to pay the death benefit to.

The Scheme Rules allow us to pay to any person or persons who fall within the classes of beneficiary set out in the Scheme Rules, in such proportions as we decide. This is called exercising our discretion.

When exercising our discretion, we will consider the deceased’s personal circumstances and family situation. We will also take into account any ‘expression of wishes’ submitted to us by the deceased, however, please note that any such wishes are not legally binding on us. We will then distribute the death benefit by paying an amount to, or for the benefit of, any beneficiary or beneficiaries chosen by us.

When a planholder passes away before their 75th birthday, in order for all settlement options to be available, the death benefit must be paid within 2 years from the date we are notified of the death.

• If we have been unable to identify beneficiaries in this time or the chosen beneficiaries have not provided their settlement option, a lump sum will be the only available option and income tax may be deducted.
• Where no beneficiaries have been identified within 2 years of notification, the death benefit will be paid as a lump sum to the deceased’s estate and may be subject to Inheritance Tax.

When a planholder passes away aged 75 or over, income tax will be deducted from the settlement regardless of the length of the claim process.

The classes of beneficiary are set out in the Scheme Rules as follows:

1. Any person, charity, association, club, society, or other body (including trustees of any trust whether discretionary or otherwise) whose names the Member has notified to the Scheme Administrator prior to the date of the Member’s death.
2. The Member’s Dependents.
3. The parents and grandparents of the Member or the Member’s surviving spouse or Civil Partner and any children and remoter issue of any of them.
4. Any person, charity, association, club, society, or other body (including trustees of any trust whether discretionary or otherwise) entitled under the Member’s will to any interest in the Member’s estate.
5. The Member’s legal personal representatives.
   For this purpose, a relationship acquired by legal adoption is as valid as a blood relationship.

As at the date of death, spouses and civil partners, and any children under age 23 are regarded as dependents.

Other people can also be regarded as dependents, and this is for the Scheme Administrator to determine.

For example, this could be someone who was assisted by the deceased with the cost of living, someone whose financial relationship with the deceased was one of mutual dependence, someone who by mutually pooling their resources maintained a lifestyle together with the deceased, or someone who relied on the deceased because of physical or mental impairment. In order to regard someone as a dependent, we will need to see satisfactory evidence of their dependency.

A nominee is someone who was nominated as a preferred beneficiary to Standard Life by the deceased during their lifetime.

If the beneficiary is a dependent or a nominee, they can choose to take the death benefit as a lump sum, a guaranteed income for life (annuity), or a flexible income (drawdown).

If there are surviving dependents or nominees, but the beneficiary is not such a person, the death benefit will be paid as a lump sum. However, if there are no surviving dependants or nominees, then the beneficiary can choose to take the death benefit as a lump sum, a guaranteed income for life (annuity), or a flexible income (drawdown).

If the beneficiary is not an individual person, for example if the beneficiary is a trust or charity, the death benefit will be paid as a lump sum.

If the deceased was under age 75 when they died, normally no tax will be payable. However, there are certain circumstances where there may still be a tax charge.

If the plan has a savings pot (meaning the part of the pension plan which the deceased had not taken benefits from), and the death benefit is not settled within two years of Standard Life being notified of the death*, the following tax charges will apply:

• If paid as a lump sum, the lump sum will be taxed at the beneficiary’s marginal rate of income tax.
• If paid as a guaranteed income for life (annuity), or a flexible income (drawdown), the income paid will be taxed at the beneficiary’s marginal rate of income tax.

If the savings pot is settled within two years of Standard Life being notified of the death, a tax charge may apply if the deceased has exceeded their lump sum and death benefit allowance (see the Lump Sum Allowance sections below).

If the plan has a drawdown pot (meaning the part of the pension plan which the deceased had designated for drawdown), and the death benefit is not settled within two years of Standard Life being notified of the death*, and the beneficiary chooses a lump sum, the lump sum will be taxed at the beneficiary’s marginal rate of income tax.

*Standard Life will endeavor to settle the death benefit as soon as possible so the tax charges for not settling within two years should only apply in exceptional circumstances.

If the deceased was age 75 or older when they died, the following tax charges will apply:

• If paid as a lump sum to an individual person, the lump sum will be taxed at the beneficiary’s marginal rate of income tax.
• If paid as a lump sum to a charity when there are surviving dependents, the tax charge will be 45%.*
• If paid as a lump sum to a trust or an estate, the tax charge will be 45%.
• If paid as a guaranteed income for life (annuity), or a flexible income (drawdown), the income paid will be taxed at the beneficiary’s marginal rate of income tax

*If the deceased was age 75 or older when they died, and the death benefit is paid to a charity of their choice, and there are no surviving dependents, then the lump sum will be tax free.

Whenever we exercise our discretion, even in favour of the deceased’s legal personal representatives, it’s our understanding that the death benefit normally falls outside the estate for inheritance tax purposes.

However, there may be specific circumstances in which the death benefit is charged to inheritance tax. For example, if the deceased arranged their affairs in such a way as to restrict our discretion and effectively decided who would receive the death benefit. Should you need an IHT409 form, you can find it on www.hmrc. gov.uk/inheritancetax, or you can call the HMRC helpline on 0300 123 1072 (+44 115974 3009) if calling from outside the UK).

The Government has set a limit on the total amount of lump sum that can be paid tax free when someone has died. This limit is known as the lump sum and death benefit allowance (LSDBA).

If the total value of benefits paid as a Lump Sum across all the registered pension schemes of which the deceased was a member exceeds the lump sum and death benefit allowance set by HM Revenue & Customs, then the amount over the allowance will be taxed as income for the person who receives the benefit.

What is the Lump Sum and Death Benefit Allowance?

The LSDBA is usually £1,073,100 but can be higher if the deceased had made an application for one of the lifetime allowance protections available. In some circumstances it may be possible for the executors to apply for lifetime allowance protection. Please let us know if there is a valid certificate in place.

If the total value of all lump sums paid across all registered pension schemes exceeds the LSDBA at the date of death, then the excess over the LSDBA is subject to income tax on whoever the amount is paid to.

If the deceased was under age 75 when they died and the claim is settled within two years:

• any lump sum death benefit from the savings pot (meaning the part of the pension plan which the deceased had not taken benefits from) will be tested against the LSDBA. For example, if one scheme pays a death benefit of £30,000, and another scheme pays £20,000, the combined figure of £50,000 is tested against the LSDBA.
• Any benefits paid as beneficiaries income (annuity or drawdown) are not tested against the LSDBA

If the deceased was over age 75 when they died or the claim takes over two years to settle:

• All benefits payments (lump sum, annuity and drawdown) will be subject to income tax against whoever the benefit is paid to.

If the LSDBA is exceeded the beneficiary receiving the lump sum will be charged income tax on the amount at their marginal rate.

For example, if the lump sums payable from all the deceased’s pension plans is £1,173,100, the £100,000 excess will be taxed as though it was additional taxable income for the beneficiary.

Where there is more than one beneficiary receiving a lump sum payment then it is the responsibility of the deceased’s executors or legal personal representatives to determine how the liability for the tax charge is to be split. The deceased’s executors or legal personal representatives are also responsible for reporting any LSDBA excess to HMRC.

The beneficiaries are responsible for paying any tax charge due directly with HMRC. Unfortunately, Standard Life cannot facilitate the payment of any LSDBA charges on behalf of beneficiaries. You should contact your financial adviser or local tax office for guidance.

Where benefits are being paid as beneficiaries income rather than as a lump sum then Standard Life will be able to facilitate the deduction of income tax from any payment that is made.

The personal data we have requested from you is collected and processed on a legitimate interest basis to inform the decision-making process and to settle the death benefit.

As part of this process, it may be necessary to collect and use personal information which is defined as ‘special category data’ by data protection law e.g. health related. Any special category data that is collected from you is done so in accordance with the law.

The personal data will be stored on Standard Life’s system for as long as is necessary to enable a decision to be made, to allow for the ongoing administration of the Scheme, and to comply with our legal and regulatory obligations. The information collected may be shared with other group companies to support the decision-making process to settle the death benefit.

The information you provide will only be processed in the UK and European Economic Area.

For more information on how we process personal data in general and what your rights are, please read our Privacy Policy or write to the Data Protection Officer at 30 Lothian Road, Edinburgh, EH1 2DH.

Pension scams are on the rise in the UK.

It’s important to be aware of potential investment scams. These scams can be very convincing and could lead to a lifetime’s worth of savings being stolen in a moment.

If you’re worried about a potential scam – visit or scam support center, or call the FCA helpline on 0800 111 6768.

This money could affect you or your partner or spouse’s entitlement to ‘means-tested benefits’.

This could include things like housing benefit or income support. Your entitlement to future benefits like help with long-term care, could also be reduced or stopped.

If you plan to use this money to repay debt, there may be early payment penalties.

You should also think about any tax you might pay. This means you may not be able to pay off as much debt as you want to.

If you have a bankruptcy or County Court Judgement against you, this payment could be used by creditors to pay off outstanding debts.

Make sure you understand all the options available to manage your debts. If you need help with managing debts, try National Debtline or Citizens Advice for support. MoneyHelper also has some useful information around dealing with debt.