Death is generally not something we like to think about, but it is important that you plan for it, especially if you have family who depend on you.
This section deals with the following issues:
- The benefit your dependants will receive on your death
- To which of your dependants this benefit will be paid – the disposal of the benefit
- Important points to note
- Insurance restrictions
Your dependants will receive a benefit equal to:
- Your Total Benefit Amount; plus
- If you are an in-service member (not a deferred beneficiary) aged below 89, an insured lump sum amount equal to 5 times your annual pensionable salary
The Trustees will usually choose to pay benefits as a lump sum (subject to tax), but will take steps to safeguard the benefits allocated to any minor dependents.
The Trustees have complete discretion as to how the benefit payable by the Political Office-Bearers Pension Fund will be allocated to your dependents and nominees. This Trustee power is derived from Section 37C of the Pension Funds Act, which requires the Trustees to allocate any retirement fund benefit to those persons (usually your immediate family) that were most financially dependent on you.
The Trustees will look at your Nomination of Beneficiaries form to see who you nominated to receive some or all of your money. However, the law clearly states that it is up to the Trustees to decide who gets the money and how it will be shared out – they are not obliged to follow the Nomination Form, although this will provide them with useful guidance (as long as it is complete and up-to-date!).
The Trustees will do their best to make sure that they find all your dependents and that the money is shared out fairly among them all. This generally means “according to need” – by law, the Trustees must consider adult children (who were not financially dependent on you) as possible beneficiaries, along with anyone else you have nominated who was not financially dependent on you, but if the money is limited then it will usually be allocated where there is greatest need in the eyes of the Trustees.
It is therefore most important that you complete a Nomination of Beneficiaries form. This is to ensure that anyone whom you wish to benefit will have the opportunity of doing so, and also to help the Trustees by providing complete details of all your children and other family members, whether or not they are financially dependent on you. Forms are available from the Fund’s Administrator or from the HR Department of your legislature.
You can update your form as often as you need to, whenever there is a change in your personal circumstances, e.g. marriage, divorce, birth of a child, etc.
- Should the cost of the insured benefits provided for Fund members increase to more than the State’s 4,8% contributions towards the insured benefits, the level of the Insured Death Benefit may be reduced from the current level of 5 times annual pensionable salaries.
- The insurer of the death benefit may ask that you be examined by a medical practitioner before providing death cover. The costs of this medical examination will usually be covered by the insurer. The Trustees will inform you in writing if medical information is required – this is very unusual.
- Insurance exclusions may be imposed, and deaths may not be covered in certain (rare) circumstances. Insurance cover ceases (falls away) on your 89th birthday.
The benefits are subject to the detailed conditions set out in the Fund’s Group Life insurance policy which are complex and may change from time to time. The main restrictions are:
- Death as a result of nuclear, chemical and biological terrorism, or of active participation in war or warlike activities will not be covered by the insurer.
- If you join the Fund as a new member and, in the insurer’s opinion, you are prevented from carrying out the duties of your office because of injury or illness and you die before you recover, the insurer will not provide a benefit for you.
- Insurance cover ceases (falls away) on your 89th birthday.
The tax treatment of the death-in-service benefit is covered in the section titled “Taxation of Benefits”.