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Lump Sum Death Grants

Lump sum death grants

Who will get the Lump Sum Death Grant when I die?

South Yorkshire Pensions Authority (SYPA) will decide who will get any Lump Sum Death Grant. It is important that SYPA decide who gets these monies, as it means they will not have to pay any tax on them. SYPA can decide to pay the death grant to one or more of the following:

  • The person(s) or bodies that have been named 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.
What is an expression of wish?

This is an important document because it tells us who you want to receive any monies when you die. Even though SYPA will not be legally bound by the expression of wish, in practice they will always want to pay the grant in line with the member’s wishes, unless there are legitimate reasons not to.

What if there is a Will?

An expression of wish form can, and should, still be completed. SYPA will request to see the Will to help make a decision on who will receive the death grant. 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?

In most cases, no. As long as the Lump Sum Death Grant is paid within 2 years of SYPA being told of the death, the Lump Sum Death Grant does not form part of the estate.

But,

If the Lump Sum Death Grant is paid more than 2 years after being told of the death, SYPA can no longer decide who will get the grant. When this happens, it will fall into the estate and have tax deductions made. The current rate of tax is 45%.

I need help completing forms for HMRC, can you help?

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 is NO. It is SYPA’s decision as to who received the Lump Sum Death grant.
Was it the trustees’ discretion to choose who should receive the lump sum?
The answer is normally YES. It is SYPA’s decision as who to make payment of the Lump Sum Death Grant to.

If you are still not sure, because the death grant was paid two years or more after the date of death, please contact us using the details at the bottom of this page.