Who is the Lump Sum Death Grant payable to?
South Yorkshire Pensions Authority (SYPA) has absolute discretion to determine who will receive any Lump Sum Death Grant payable from the scheme. SYPA can pay the death grant to one or more of the following:
- The person(s) or bodies that have been nominated on an expression of wish form and/or
- The personal representatives and/or
- Any person who appears, at any time, to have been a relative or dependant.
The completion of an expression of wish form is important because it helps to ensure that a members wishes can be taken into account when SYPA are making a decision as to the payment of the Lump Sum Death Grant but is not binding. In practice, SYPA will seek to pay the death grant in accordance with the member’s wishes unless it is satisfied there were legitimate reasons why it would not be appropriate to do so.
What if there is a Will?
An expression of wish form can and should still be completed and SYPA will request to have sight of the Will to help make a decision on who to make payment to. This helps the fund to build a picture on the best course of action to follow.
Does the Lump Sum Death grant form part of the estate?
If the Lump Sum Death Grant is paid within 2 years of SYPA being informed of the death then the Lump Sum Death Grant does not form part of the estate.
If the Lump Sum Death Grant is paid more than 2 years after being informed of the death then SYPA loses its discretion on who to make payment to. In this scenario, the payment is due to the estate but would be subject to a tax charge (currently 45%).
Need help with completing HMRC forms.
If you are completing an HMRC inheritance tax form regarding the Lump Sum benefit please find below some useful information to help you answer the questions:
Could the deceased, right up to their death, have signed a binding `nomination’ which obliged the trustees of the pension scheme to make payment to a person nominated by the deceased?
The answer to this question is NO. It is SYPA’s discretion as to who received the Lump Sum Death grant. The expression of wish form isn’t binding on SYPA.
Was it the trustees’ discretion to choose who should receive the lump sum?
The answer to this question is YES. It is SYPA’s discretion as who to make payment of the Lump Sum Death Grant to (unless the death grant wasn’t paid within two years of the date of death).