Benefits payable when you die

Transcription

1 Benefits payable when you die For Section A/B members This guide contains details of the benefits that may be payable to your dependants in the event of your death, and the things you can do now to make things easier for those closest to you should something happen. July 2012

2 Introduction The Postal Services Act 2011 (the Act) introduced powers for the Government to take over responsibility for the majority of the assets and liabilities of the RMPP. The Government has established a new pension scheme (the RMSPS) which will be responsible for paying the benefits that members of the RMPP had built up to the end of 31 March 2012 (the cut-off date). The RMPP will remain responsible for all pension benefits earned by members after the cut-off date (as well as some increases applicable to benefits earned up to the cut-off date and all Bonusplan and Flexiplan AVC accounts). This means that only those who were active members of the RMPP on 1 April 2012 will have any benefit entitlement from the RMPP. Members who were already pensioners at the cut-off date will receive their entire pension from the new Government scheme the RMSPS as will those members who had left employment with the Company or opted out of the RMPP on or before the cut-off date but were not immediately in receipt of a pension (deferred members). Members who were in employment with the Company on 1 April 2012 will receive two payments when they start to receive their pension one from the RMSPS in respect of pension accrued up to the end of the cut-off date and the other from the RMPP in respect of pension accrued after the cut-off date (as well as some increases applicable to benefits earned before the cut-off date, as mentioned above). The way that benefits will be allocated between the RMSPS and the RMPP is complex but the following explains broadly how it will be achieved. k A benefit is calculated, on the same basis as if the Act had not been passed: k Calculating what the RMPP pays The RMPP will pay a sum which is equal to the overall benefit described above, less what you would have had from the RMPP if this calculation were done as at 31 March 2012; k Calculating what the RMSPS pays The RMSPS pays the benefits built up to the end of the cut-off date. These calculations are carried out by the Pensions Service Centre (PSC). 2

3 The RMSPS and the RMPP not only provide you with a pension and a lump sum when you retire or choose to take your benefits, they also offer some generous benefits designed to make life easier for your beneficiaries in the event of your death. Your beneficiaries might be your: k Spouse; k Civil partner; k Children; or k Someone who is financially dependent on you when you die (such as an unmarried partner or an elderly relative who relies on your support). We may pay a pension to one or more of these people, subject to certain requirements, and we may also provide a lump sum payment in certain circumstances. These are valuable benefits and it is therefore important that we are aware of your wishes, where appropriate, in the event of your death. This guide explains more about the various death benefits and the things you can do now to make life easier for others. This guide is intended to be a summary of the provisions of the RMSPS and the RMPP as they relate to your death benefits. The RMSPS is governed by formal Rules. Responsibility for managing the scheme rests with the Manager of the RMSPS. If there is a conflict between the Rules and this guide (insofar as it relates to benefits payable from the RMSPS), the Rules will prevail. The RMPP is governed by formal legal documents known as the Trust Deed and Rules and is managed by the Trustee. If there is a conflict between those documents and this guide (insofar as it relates to benefits payable from the RMPP), the Trust Deed and Rules will prevail. This guide reflects current tax laws. Any nomination (be it prior to 1 April 2012, or later) will be taken into account in relation to benefits payable from the RMSPS and the RMPP unless we are advised otherwise. 3

4 Lump sum death benefit Each of the RMSPS and the RMPP may pay a lump sum when you die, the amount of which will depend on your circumstances at the time, for example whether: k You are still working for the Company and paying contributions (or have reached 45 years reckonable service); k You are receiving some or all of your benefits; or k You have left Company employment or chosen to leave the RMPP and so have preserved benefits. For employee members, various flexible retirement options are available so that you may choose to receive part of your benefits whilst continuing to build up further RMPP benefits, payable at a later date. The charts on pages 7 and 8 will help you to understand the amount of the lump sum death benefit payable in different situations. You can find out more about the different flexible retirement options in the guide Flexible retirement options and benefits which can be downloaded from or is available on request from the Pensions Service Centre (PSC) whose contact details are at the end of this guide. 4

5 Pensions for your dependants In addition to any lump sum death benefit, each of the RMSPS and the RMPP will also pay a pension on your death to one or more of the following people (depending on your circumstances): k A widow, widower or civil partner; k Your children (up to the age of 18 or, if they are in full-time education or training, up to the age of 23). As explained in the guide Flexible retirement options and benefits, which can be downloaded from or is available on request from the Pensions Service Centre (PSC), it is possible for your NRA 60 and NRA 65 benefits to be paid at different times and for you to remain in Company employment whilst receiving some or all of those benefits. In the same way that your flexible retirement options affect the calculation of the lump sum death benefit, they also determine how the pensions for your widow, widower, civil partner and children are calculated. 5

6 Children s pensions Your children will normally get a pension if they are under 18, or under 23 and in full-time education or training which is approved by the Manager of the RMSPS and the Trustee of the RMPP (for their respective benefits), or incapable of self-support because of physical or mental incapacity. Their pension will be a proportion of the pension you were entitled to or, if you die in reckonable service, would have received if you had retired on ill health grounds on the date of your death. How much they get will depend on the number of children you have and whether or not a spouse s, civil partner s or dependant s pension is payable: k Where a spouse s, civil partner s or dependant s pension is payable, the proportion will be of your pension if there is one child, or (divided between the children) where there are two or more children. k Where no spouse s, civil partner s or dependant s pension is payable, the proportion will be of your pension if there is one child or (divided between the children) where there are two or more children. 6

7 What benefits will be paid when I die? Please follow the steps in one of the following two charts (depending on whether or not you are still employed by the Company) and then refer to the corresponding section later in this guide to see how the lump sum is calculated. The benefits payable on your death will depend on your circumstances immediately before you die. Follow this flow-chart if you are still employed by the Company: Are you still paying contributions (or have you reached maximum reckonable service)? NO YES Are you receiving your NRA 60 benefits? Are you receiving your NRA 60 benefits? NO YES NO YES Go to b Go to a Are you receiving your NRA 65 benefits? Are you receiving your NRA 65 benefits? NO YES NO YES Go to f Go to e Go to d Go to c 7

8 Follow this flow-chart if you are NOT still employed by the Company: Are you receiving your NRA 60 benefits? NO YES Are you receiving your NRA 65 benefits? Are you receiving your NRA 65 benefits? NO YES NO YES Go to f Go to e Go to d Go to c Please note: Your NRA 60/65 benefits are the pension benefits payable from age 60 or 65 respectively. 8

9 a A lump sum death benefit of whichever of the following benefits or below gives the higher amount: Four times your pensionable salary, less the value of the lump sum you were paid when you began to receive your NRA 60 benefits and the gross value of any pension payments you have received. Please note: If you are working part-time at the date of death, the pensionable salary used in this calculation is not uprated to the full-time equivalent); or The total of: a) Five times the annual rate of the NRA 65 benefits that would have been payable to you (without enhancement) at the date of your death; plus b) If you die within five years of your NRA 60 benefits coming into payment, the balance of the NRA 60 benefits you would have received for the first five years since your payments started (excluding any future increases). Please note: If you have been receiving your NRA 60 benefits for more than five years, there will be no lump sum payable in respect of this portion of your benefit. If you paid the additional 0.2% contribution until 31 March 1999, the above calculation will be replaced by the following calculation if it produces a higher amount: k 3/80ths of your pensionable salary for each year (or part year) of reckonable service completed before 1 April 1999; plus k Five times the annual rate of your NRA 60 benefits built up before 1 April A pension payable to your spouse or civil partner calculated as follows: k Payable at the same rate as your pension for the first 91 days after your death and then up to half the NRA 60 benefits that you were receiving at the date of your death ignoring any pension you gave up for a lump sum when your payments started; plus k Up to half the NRA 65 benefits that you would have received if you had been retired on ill health grounds with immediate payment at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 9

10 b A lump sum death benefit of whichever of the following benefits or below gives the higher amount: Four times your pensionable salary. Please note: If you are working part-time at the date of death, the pensionable salary used in this calculation is not uprated to the full-time equivalent); or Five times the annual rate of the NRA 60 and NRA 65 benefits that would have been payable to you (without enhancement) at the date of your death. If you paid the additional 0.2% contribution until 31 March 1999, the above calculation will be replaced by the following calculation if it produces a higher amount: k 3/80ths of your pensionable salary for each year (or part year) of reckonable service completed before 1 April 1999; plus k Five times the annual rate of your NRA 60 benefits built up before 1 April A pension payable to your spouse or civil partner calculated as follows: k Up to half the NRA 60 and NRA 65 benefits that you would have received if you had been retired on ill health grounds with immediate payment at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 10

11 c A lump sum death benefit as follows: k If you die within five years of your NRA 60 benefits coming into payment, the balance of the NRA 60 benefits you would have received for the first five years since your payments started (excluding any future increases). Please note: If you have been receiving your NRA 60 benefits for more than five years, there will be no lump sum payable in respect of that portion of your benefit; plus k If you die within five years of your NRA 65 benefits coming into payment, the balance of the NRA 65 benefits you would have received for the first five years since your payments started (excluding any future increases). Please note: If you have been receiving your NRA 65 benefits for more than five years, there will be no lump sum payable in respect of that portion of your benefit. A pension payable to your spouse or civil partner at the same rate as your pension for the first 91 days after your death and then calculated as follows: k Up to half the NRA 60 benefits that you were receiving at the date of your death; plus k Up to half the NRA 65 benefits that you were receiving at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 11

12 d A lump sum death benefit of whichever of the following benefits or below gives the higher amount: 1¼ times pensionable salary. Please note: If you are working part-time at the date of death, the pensionable salary used in this calculation is not uprated to the full-time equivalent); or The total of: a) Five times the annual rate of the NRA 65 benefits that would have been payable to you (without enhancement) at the date of your death; plus b) If you die within five years of your NRA 60 benefits coming into payment, the balance of the NRA 60 benefits you would have received for the first five years since your payments started (excluding any future increases). Please note: If you have been receiving your NRA 60 benefits for more than five years, there will be no lump sum payable in respect of this portion of your benefit. If you paid the additional 0.2% contribution until 31 March 1999, the above calculation will be replaced by the following calculation if it produces a higher amount: k 3/80ths of your pensionable salary for each year (or part year) of reckonable service completed before 1 April 1999; plus k Five times the annual rate of your NRA 60 benefits built up before 1 April A pension payable to your spouse or civil partner calculated as follows: k Payable at the same rate as your pension for the first 91 days after your death and then up to half the NRA 60 benefits that you were receiving at the date of your death; plus k Up to half the NRA 65 benefits that you would have received when you left reckonable service, had you been 65 at that date. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 12

13 e A lump sum death benefit of whichever of the following benefits or below gives the higher amount: 1¼ times pensionable salary. Please note: If you are working part-time at the date of death, the pensionable salary used in this calculation is not uprated to the full-time equivalent); or The total of: a) Five times the annual rate of the NRA 60 benefits that would have been payable to you (without enhancement) at the date of your death; plus b) If you die within five years of your NRA 65 benefits coming into payment, the balance of the NRA 65 benefits you would have received for the first five years since your payments started (excluding any future increases). Please note: If you have been receiving your NRA 65 benefits for more than five years, there will be no lump sum payable in respect of this portion of your benefit. If you paid the additional 0.2% contribution until 31 March 1999, the above calculation will be replaced by the following calculation if it produces a higher amount: k 3/80ths of your pensionable salary for each year (or part year) of reckonable service completed before 1 April 1999; plus k Five times the annual rate of your NRA 60 benefits built up before 1 April A pension payable to your spouse or civil partner calculated as follows: k Up to half the NRA 60 benefits that you would have received when you opted out had you been 60 at that date (or when you left reckonable service, if you are no longer in Company employment); plus k Up to half the NRA 65 benefits that you were receiving at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 13

14 f A lump sum death benefit of whichever of the following benefits or below gives the higher amount: 1¼ times pensionable salary. Please note: If you are working part-time at the date of death, the pensionable salary used in this calculation is not uprated to the full-time equivalent); or Five times the annual rate of the NRA 60 and NRA 65 benefits that would have been payable to you (without enhancement) at the date of your death. If you paid the additional 0.2% contribution until 31 March 1999, the above calculation will be replaced by the following calculation if it produces a higher amount: k 3/80ths of your pensionable salary for each year (or part year) of reckonable service completed before 1 April 1999; plus k Five times the annual rate of your NRA 60 benefits built up before 1 April A pension payable to your spouse or civil partner, calculated as follows: k Up to half the NRA 60 and NRA 65 benefits that you would have received when you opted out (or left reckonable service if you are no longer employed by the Company) had you reached age 60 (in relation to NRA 60 benefits) or 65 (in relation to NRA 65 benefits). Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 14

15 What happens if I have benefits from another pension scheme? If the value of all benefits payable from all registered pension schemes (including benefits payable on death) does not exceed the Lifetime Allowance (LTA), there will be no additional tax for your personal representatives to pay. It will be the responsibility of your personal representatives to declare any benefits in excess of the LTA to HM Revenue & Customs (HMRC) at the time your benefit payment is made. To whom will the lump sum death benefit be paid? However the lump sum is calculated, in accordance with the preceding pages, it will automatically be paid to your personal representative(s) (the executors or administrators of your estate) and may be subject to Inheritance Tax unless you complete a Direction of lump sum death benefit form which can be downloaded from or is available on request from the Pensions Service Centre (PSC). Please note: Inheritance Tax laws may change from time to time and neither the Manager of the RMSPS, Trustee of the RMPP nor the PSC can provide advice on Inheritance Tax. For further information you should contact your local tax office or visit the HMRC website at You could also contact an Independent Financial Adviser. You can find a local Independent Financial Adviser by visiting 15

16 Pensions on the death of an unmarried member or a member not in a civil partnership Each of the RMSPS and the RMPP may pay a pension to one of your dependants if, when you die: k Your benefits are paid under the Section B (not Section A) rules; k You are not married to, or in a civil partnership with, any person; and k You financially support someone. It will help the Manager of the RMSPS and the Trustee of the RMPP to make a decision if you complete a Dependant s pension nomination form which can be downloaded from or is available on request from the Pensions Service Centre (PSC). However, your dependant will still be eligible to be considered for a pension if you do not complete the form. After your death (and never before then), the person you have nominated will be asked to provide information about their dependency on you. The Manager of the RMSPS and Trustee of the RMPP will then decide whether or not they are eligible for the pension, and if a pension should be paid. If we decide that a pension is to be paid, your dependant will be contacted and advised of how long the pension will be paid for, and of any terms applying to it. Who can I nominate to receive a dependant s pension? The person you nominate must be financially dependent on you in some way immediately before your death. This will normally be someone who is living with you. Examples of people who may be considered for a dependant s pension are: k A long-term partner (to whom you are neither married nor in a civil partnership with); k An elderly parent who cannot support themselves because of ill health; or k Your full-time carer. Please note: Current tax laws may prevent the payment of a dependant s pension to your son or daughter aged over 23. Please contact the PSC for further information, if needed. 16

17 What does financially dependent mean? A person may be considered financially dependent on you if: k They share living expenses with you; or k Receive financial support from you; and k Their standard of living would be affected by the loss of your contribution or support. How much will a dependant s pension be? The amount will be calculated in the same way as a pension for a spouse or civil partner (see previous pages) and so will generally be up to half of your pension entitlement. If it is decided that a pension is to be paid, your dependant will be contacted and advised of how long the pension will be paid for, and of any terms applying to it. How can I nominate someone? You should complete a Dependant s pension nomination form and return it to: Pensions Service Centre PO Box 500 CHESTERFIELD S49 1WX If you need help in completing the form you can: k Phone the PSC on Postline or please have a pen and paper ready; or k them, either via pensions.helpline@royalmail.com or via the website at 17

18 Can I change my nomination? To withdraw your nomination you must write to the PSC at the address on the previous page, quoting your full name, date of birth and either your National Insurance number or membership number. If you simply want to change your nomination you will need to complete a new form, which can be downloaded from or is available on request from the PSC their details are given on page 17. Please note: Your nomination may be disregarded if your personal circumstances have changed significantly since it was last completed. Data Protection Act We will need to process certain data about you: k To calculate and pay benefits; k For statistical purposes; k For reference purposes; and k To administer the RMSPS and the RMPP. This may include sensitive data, such as medical details or information about your nominee(s) for death benefit nominations, dependant s pensions etc. Where sensitive data is to be processed, you will need to confirm in writing (by signing the relevant nomination and/or direction forms) that you, and your nominee(s) where appropriate, agree to the processing of this data for these purposes and that the data may be shared with the administrators, Actuary and advisers to the RMSPS and the RMPP, the Company and other third parties as necessary. By signing the nomination form you are confirming that you fully understand this and that you, and your nominee(s), agree to the processing of this data for these purposes. 18

19 Glossary of terms Actuary An expert on pension scheme assets and liabilities, specialising in life expectancy and probabilities (the likelihood of things happening) for insurance and pension purposes. The Actuary for the RMPP is appointed by the Trustee and the Actuary for the RMSPS is appointed by the Government. Additional Voluntary Contributions (AVCs) Extra contributions you can pay to increase your RMPP benefits. You may pay up to a total of 100% of your taxable pay to the RMPP should you wish, including your normal contributions of 6% of contributory pay. However, please be aware that if you wish to pay significant additional pension contributions, they may have to be restricted to ensure that any normal regular deductions can still be made from your earnings. Details of the AVC arrangements are included in the Guide to Additional Voluntary Contributions which can be downloaded from or requested from the Pensions Service Centre. Company k For the RMG section, Royal Mail Group or any of its associated or subsidiary companies which are participating in the RMPP; and k For the POL section, Post Office Limited. Ill health Means serious physical or mental ill health (not simply a decline in energy or ability) such that, in the opinion of the Company, you are permanently incapable of: k Carrying out your duties; k Carrying out such other duties as the Company might reasonably expect you to perform; and k Engaging in employment with any other employer which, in the opinion of the Company, would be reasonable and appropriate for you. However, if you: k Become entitled to preserved benefits; and k You were in reckonable service on 31 March 2000, ill health means physical or mental disablement which permanently prevents you from providing regular and efficient service in your post. The Company s decision as to whether you are in ill health will be final. Confirmation will be required from a registered medical practitioner that you are (and will continue to be) incapable of carrying on your occupation because of physical or mental impairment. In addition, if you are under 55 when you apply for a pension on ill health grounds, you must have ceased carrying on your occupation. 19

20 Manager The Secretary of State or those to whom he has delegated responsibility for management of the RMSPS. Normal Retiring Age (NRA) In relation to reckonable service before 1 April 2010, this is your 60 th birthday. In relation to reckonable service on or after that date, it is your 65 th birthday. NRA 60 benefits Pension and lump sum benefits you earned during reckonable service prior to 1 April 2010, where the applicable Normal Retiring Age is 60. NRA 65 benefits Pension and lump sum benefits you earned during reckonable service on and from 1 April 2010, where the applicable Normal Retiring Age is 65. Pensionable salary This is used to calculate the part of your pension benefits that relate to your service before 1 April 2008 and the lump sum benefit paid to your dependants if you die while still working for the Company. It is the total of your basic annual salary or wages (including, where appropriate, London Weighting) plus any pensionable allowance in whichever of the last three years of reckonable service gives you the highest amount. Pensionable salary is adjusted to the full-time equivalent during periods of part-time employment unless otherwise stated. Where it would give you a higher amount, your average annual pensionable salary plus other pensionable payments over the best three consecutive tax years in the last ten years will be used. The best year in the last three years ends on either: k The last day of your reckonable service; or k A date which is 91 days (or up to eight multiples of 91 days) before the last day of your reckonable service. For example: If your last day of service is 30 November 2012, your best year could end on that date or on any of the following dates which are 91 days (or multiples of 91 days) before 30 November 2012: k 31 August 2012 k 1 June 2012 k 2 March 2012 k 2 December 2011 k 2 September 2011 k 3 June 2011 k 4 March 2011 k 3 December 2010 Plan Year 1 April to 31 March. 20

21 Preserved benefits If you leave service (or opt out of membership), you will then be entitled to preserved benefits (also called deferred benefits) which would normally be paid from Normal Retiring Age. Reckonable service This is the service which is used to work out your pension benefits. It includes service as an RMSPS and/or RMPP member, service transferred in from other pension schemes and additional service bought by Additional Voluntary Contributions (AVCs) or additional Company contributions. It does not include any periods during which you opted out of the RMPP. The maximum reckonable service used to calculate benefits is 45 years. RMPP Royal Mail Pension Plan. RMSPS Royal Mail Statutory Pension Scheme. Trustee Royal Mail Pensions Trustees Limited the organisation that manages the RMPP in accordance with its Trust Deed and Rules. We Us Our The Manager of the RMSPS and/or the Trustee of the RMPP. 21

22 Get in touch For further information on benefits payable when you die or for more general information about the RMSPS or the RMPP, you can contact the Pensions Service Centre (PSC) using the details below. Pensions Service Centre PO Box 500 CHESTERFIELD S49 1WX Pensioner Helpline Helpline for all other members or Postline network users can call Please quote your full name, date of birth and either your National Insurance number or membership number when contacting the PSC. All booklets are also available to download from the website at 22

23 Notes 23

24 3AB July 2012