We all like to plan for a bright future. However, sometimes, we must take account of the potential for something to go wrong. You might die while still serving as a teacher. Although you may not be around to be concerned by matters of finance, your family could experience hardship with the loss of your salary. Therefore, you must understand the benefits within the Teachers’ Pension Scheme in the event of your death.
In-service death grants
It sounds morbid, but the in-service death grant is an important, and generous, benefit of your pension. In the event of your death, a payment is made to your next of kin or nominated person. This death grant could be payable if you die within 12 months of leaving pensionable service if you are leaving service due to being incapacitated.
However, if you enter a period of non-pensionable sick pay, which is when you fall to half-pay at six months, then you are not considered to be in pensionable service and so do not receive the in-service death benefit.
How much would your beneficiary receive?
The sum received is not insubstantial. It is, for this reason, you must keep your nominated person up to date on MPO (My Pension Online).
For those in the Career Average Arrangement, your nominated person will receive three times your annual rate of pensionable earnings.
For those in the Final Salary Scheme, it is three times the full-time equivalent of pensionable salary.
If you are in additional service after retirement, this sum will be adjusted depending on what lump sum you claimed at the end of pensionable service.
What if I have left teaching?
You still need to be aware of your nominated person, even if you have left teaching. The out of service grant is still 2.25 times the value of your annual pension. This amount could still be in the tens of thousands. You need to be sure your wishes are known, and the person who should receive this grant benefits in the event of your death.
The content in this article was correct on 26th August 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.