Death benefits

A death benefit lump sum is payable when you die depending on whether you:

• were still working for an employer who participates in the CSP arrangements;
• had retired; or
• had left with preserved benefits but have not yet reached scheme pension age 60.

This lump sum is separate to the automatic lump sum that you get on taking your pension.

You can nominate any person, including a child, to receive the death benefit lump sum. The advantage of making a nomination is that we can then pay the benefit without delay.

If you do not nominate anyone, we will pay the lump sum to your personal representative.

You can add or amend your death benefit nomination in the Pension Portal or by completing a death benefit nomination form. You can download the form from the Member Forms page.

Please make sure that you keep your nomination up to date and that you update MyCSP if your wishes or circumstances change.

The nomination will remain valid unless you change or cancel it, or if the person you nominated dies. An exception to this is when you nominate your husband, wife or civil partner and the marriage/civil partnership comes to an end, through divorce/dissolution (but not separation). The nomination is then no longer valid and you should make a new nomination.

If you separate from a partner to whom you are neither married nor in a civil partnership with and you had nominated them as a beneficiary, the nomination will remain valid. You will need to change your nomination, or cancel it, if you wish.

The Pension Portal and your Annual Benefit Statement (ABS) document show your current nominee(s).

In most circumstances HMRC regulations do not take account of the death benefit lump sum when assessing liability for inheritance tax.

Important note

At the time of a divorce or dissolution, a court may order that when a scheme member or a previous member dies, all or part of the death benefit must be paid to the ex-husband, ex-wife or ex-civil partner. If this is the case, we will pay any remaining balance to the person you nominated (nominee) or to your personal representative.

If you die while still working for an employer who participates in the CSP arrangements, the death benefit lump sum is normally equal to two years’ pensionable earnings. If you are a re-employed pensioner or you have taken partial retirement, it may be reduced to take account of pension benefits you have already received. We will pay it to your nominee or to your personal representative.

The death benefit lump sum is equal to the preserved lump sum that would otherwise have been paid to you if you had taken your pension.

We will pay it to your nominee or to your personal representative.

We will reduce this benefit should we need to recover any scheme contributions that you owed.

Example:

You leave with five years’ reckonable service. You have preserved benefits of £1,250 a year in a pension and £3,750 as a lump sum. You die five years later, during which time the cost of living has risen by 4% a year. The death benefit lump sum will have risen to £4,562.

We may pay a death benefit lump sum if you die within five years of retiring. We work it out as the difference (if any) between five times your annual pension on the date you died and the total pension and lump sum payments you have already received.

We will pay it to your nominee or your personal representative.

Example:

Your annual pension is £7,500 and the lump sum is £22,500. You die 11 months after retiring. We work out the lump sum in two parts. We work out the maximum benefit first and the benefits you have already received are taken from this.

Maximum benefit: 5 x £7,500 = £37,500

Less the benefits you have already received:

£6,875 (11 months’ pension)

+22,500 = £29,375

Lump sum to pay:

£37,500 - £29,375 = £8,125

If you choose to take an additional lump sum on retiring, it will impact on this ‘death after retirement’ lump sum. The additional lump sum will reduce (or possibly cancel out) any potential death benefit lump sum payment.

It's important that we're notified of your death as soon as possible, to prevent us making any overpayments. If overpayments need to be returned, this will not impact any payment of dependant benefits, or delay any dependant benefit claims.

We pay pension benefits to your widow, widower or surviving civil partner and dependent children when you die depending on whether, at the date of your death, you were:

• a current member
• a retired member
• a deferred member with preserved benefits.

There are two types of pension that we may pay to your widow, widower or civil partner.

The short-term increase is to help during the especially difficult period immediately after you die and is generally payable for 91 days (although we will extend this period if you leave dependant children).

After the short-term increase ends, it is replaced by a continuing pension.

This is a proportion of:

• the enhanced pension that would have been paid if you had been retired due to ill health (if you die in service with two or more years’ qualifying service);
• your actual pension (if you die after retirement) or;
• your preserved pension (if you die as a previous member with preserved benefits).

The level of the continuing pension will depend on the contributions you have paid. If you joined classic after 1 June 1972 (men) or 1 July 1987 (women), the continuing pension for your widow or widower is normally one half of your pension, though it may be less if you were married after leaving the Civil Service. If you die leaving a surviving civil partner, their continuing pension will be based on your service from 6 April 1988 only.

If you are a man and were in post before 1 June 1972, your service before that date will normally provide a widow’s pension of 1/3rd of your pension. This is unless:

• in 1972 you chose to pay increased contributions to provide a one half pension; or
• you were in service on 14 July 1949 and opted not to provide a widow’s pension.

If you are a woman and were in post before 1 June 1987, you were only able to provide a widower’s pension if your husband was dependent on you.

The contribution rate was the same as for men and the pension payable the same as for a widow.

Child’s pension (for each child) = ¼ x (20,000/80) x 20 = £1,250 a year (payable after six months).

The continuing widow’s, widower’s or surviving civil partner’s pension and the child’s pension include a service enhancement that increases the total reckonable service to 20 years.

We will pay continuing pension to your widow, widower or surviving civil partner if you have preserved benefits in classic. It is normally equal to one half of your preserved pension and will take account of the cost of living increases granted since you left the scheme. However, it may be lower than this because:

• you chose to contribute for lower benefits (see information under ‘Level of pension’ on page 16);

or

• you married after you left the scheme, in which case the continuing pension is based on service from 6 April 1978 (men) or 6 April 1988 (women);

or

• you have a civil partner, in which case the continuing pension is based on service from 6 April 1988 (men and women).

Also, we will pay child pensions until the children are no longer eligible. To be eligible for a children’s pension the children must have been conceived or born before your employment with a Civil Service pension employer ends.

Your widow, widower or civil partner will not receive a short-term increase.

Example:

You were a member with preserved benefits of £1,250 a year and you die five years after leaving. During this time, the cost of living has risen by 4% a year. The preserved pension will have risen to £1,520 a year.

Continuing widow’s, widower’s or civil partner’s pension = ½ x £1,520 = £760 a year (payable immediately).

Example:

You die with an annual pension of £7,500, leaving a husband, wife or civil partner but no dependent children.

Short-term widow’s, widower’s or surviving civil partner’s increase = £7,500 a year (payable for three months).

Continuing widow’s, widower’s or surviving civil partner’s pension = ½ x £7,500 = £3,750 a year (payable after 91 days).

If your widow, widower or surviving civil partner remarries or enters a (new) civil partnership or lives with someone as husband and wife or as civil partner, the pension will either stop or reduce. It may be restored if:

• the second marriage, civil partnership or cohabitation has come to an end and your widow, widower or surviving civil partner is left financially worse off than he or she was at the end of the marriage/civil partnership that gave rise to the civil service pension, or
• there are exceptional compassionate reasons for restoring the pension.

We work out children’s pensions as a proportion of:

• the enhanced pension that you would have had if you had been retired due to ill health (if you die in service with two or more years’ qualifying service)
• your actual pension (if you die after retirement)
• your preserved benefits (if you die as a previous member with preserved benefits).

Unlike the continuing pension for your widow, widower or surviving civil partner, children’s pensions do not depend on a minimum length of your qualifying service.

If you leave more than two children who qualify for a pension we will reduce each child’s pension so they each get an equal share.

We pay children’s pensions for children up to age 17.

We also pay for children over 17 and under 23 while they are in full-time education or vocational training. In these cases, the Scheme Administrator (MyCSP) will need to see a letter from the school, college or university where they are studying, confirming the start and end dates of the course.

On the advice of the Scheme Medical Adviser (SMA), we will pay a life pension for any child who has a permanent physical or mental impairment.

We will pay child pensions until the children are no longer eligible. To be eligible for a children’s pension the children must have been conceived or born before your employment with a Civil Service pension employer ends.