From time to time, we receive questions about how death benefits are dealt with under our SIPP and SSAS schemes.
This short guide should be read in conjunction with our SIPP and SSAS Guides to Death Benefits which are available on our website.
Who decides who shall receive death benefits?
Like most UK pension funds, death benefits are paid at the discretion of the trustees. This means that the funds are not lost on death, but who shall receive them is a decision made by the surviving trustees.
For our SIPPs, the decision will be made by InvestAcc Pension Trustees Limited. For our SSAS schemes, the decision is made by the Managing Trustees.
Who can receive death benefits?
Under our pension schemes, death benefit payments can be made to individuals or trustees of a suitable trust. Some individuals may only be offered a lump sum, but dependants (as defined in the scheme rules) and those nominated may also be given the option of taking a pension via a Beneficiary Drawdown plan for dependants, nominees or successors.
There is also the option of making a lump sum payment to a charity which was nominated by the deceased whilst they were alive, provided there are no surviving dependants at the time of payment.
Why are death benefits dealt with on a discretionary basis?
By dealing with the death benefits on a discretionary basis, this usually avoids payments becoming subject to Inheritance Tax, as in most cases they do not form part of the estate of the deceased.
This area of pensions and tax law can be complex and as we do not provide advice, we recommend that you seek financial and/or legal advice.
How do I make a nomination of beneficiaries?
The trustees will consider the most recent nomination you have made when making their decision.
To help with this, we have a nomination of beneficiaries form on our website. When the plan was first set up it is likely that we will have also asked you to indicate your nominated beneficiaries at the time.
You can make changes to your nominated beneficiaries at any time simply by completing a fresh nomination of beneficiaries form.
It will always assist the trustees if there is an up to date nomination of beneficiaries, even if there has been no change since the original nomination.
Information required to help the trustees with their decision
When we are notified of the death of a pension scheme member, we go through a process of gathering information to make sure that the death benefits are paid to the correct person(s).
This includes obtaining information from someone dealing with the estate of the deceased which may lead to further enquiries at what can be a very sad and difficult time.
It is not uncommon for those dealing with the estate to be very close family members and for them not to be aware of the need to provide information to the trustees, or the reasons for this.
What happens if there is a dispute?
Ultimately the trustees have a decision to make based on the information available. This information can sometimes be provided by more than one source, particulary if there is a dispute between potential beneficiaries.
In some cases, one party may be unhappy if they feel that the decision made by the trustees was wrong. The trustees will consider any representations made to them, when making their decision.
Note that this article was originally published in December 2022 and was updated in August 2024.
August 28th, 2024
The Minerva SIPP can invest in a wider range of assets including commercial property and land, on an individual or group basis. Any combination of permitted investments may be made within a Minerva SIPP including deposit accounts, DFM, open market platform/wrap accounts, stockbroker accounts and trustee investment plans, all held together within the same SIPP.
SIPP Lite is a lower cost option, for those that do not require multiple investment accounts, or access to commercial property and land at outset. SIPP Lite members are restricted to a maximum of one investment account, to run alongside the default SIPP bank account. This investment account could be another bank account or ONE of the following: stockbroker account, DFM, open market platform/wrap account or a trustee investment plan. For individuals that require additional investments at a later date, including commercial property and land, they can upgrade their SIPP Lite plan to a Minerva SIPP.
A Small Self-Administered Scheme (SSAS) is a type of UK registered pension scheme. Each SSAS is governed by its own trust deed and rules and is a separate legal entity to the sponsoring employer. The sponsoring employer establishes the SSAS and invites members to join. Any individual employed by the sponsoring employer (or a participating employer) may join the scheme and all members are appointed as trustees alongside the professional trustee. SSAS trustees have a very wide range of investment options, including the ability to make secured loans to the sponsoring employer of up to 50% of the net asset value of the scheme, subject to certain conditions.
We have been operating in these markets for over 20 years. The SSAS business was formed in 1997, and in 2003 we launched our flagship product, the Minerva SIPP. The range is completed by SIPP Lite, which has been available since July 2012.
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