As an NHS Pension Scheme member, do you know what your loved ones are entitled to from your protection policies? NHS Pension holders receive valuable benefits from the policy, but it’s important to be aware of what exactly your family gets and if that’s not enough, you need a plan to bridge the gap.
This does not constitute advice and advice should be sought in all instances before acting on it.
NHS Pension Benefits
Currently, any member paying into the scheme is eligible for benefits, and the member’s family will be provided with a lump sum in the event of their death. The sum is twice the pension holder’s annual pensionable pay or average uprated earnings for practitioners.
As soon as you join the scheme, you qualify for the benefit distribution. After two years, you’re eligible for another benefit for your dependents — a “Partner’s Pension”. This pays out to your spouse or qualifying partner that meets certain criteria including, relationship length, financial interdependence, and whether they’re free to marry or enter into a civil partnership.
Your children are also eligible for pensions under the NHS Pension Scheme. Biological children, step-children, adopted children, and grandchildren may all receive payouts, including any dependent child under the age of 23 or a child of any age that cannot earn a living of their own due to a physical or mental disability
Other variations
If you’ve opted out or are a deferred member, you are not eligible for a death in service benefit.
Members of the following sections’ payouts differ as detailed:
- 1995 members: lump sum is 3x their pension
- 2008 members: lump sum is 2.25% their pension
- 2015 members: lump sum is 2.025% their pension (the amount they would have received had they retired on the day they died.)
Plus, dependents’ and children’s pensions based on your NHS Pension membership to date will also be paid. For active members, or those who opted out of the NHS Pension scheme within 12 months, their dependents and children will get an increased pension based on the original Scheme retirement date.
Review your coverage
When you’ve worked out how long the Death In Service payout will actually last your family, you’ll realise that the lump sum will not be sustainable, continuous support. It should be treated as temporary assistance and you’ll want to consider additional protection policies to provide for your family.
As a refresher, the types of coverage available are income protection, critical illness, and life cover.
They all offer financial security for different situations and in an ideal world, you’d secure all three kinds, but carefully review the benefits each policy type offers to determine how much additional coverage you need.
COVID-19 Death In Service Benefits
The newly announced life assurance scheme that provides a £60,000 lump sum for families of full-time, part-time, and locum NHS and public health workers (including GPs, dentists, retired staff, and second and final year students) who volunteer to work on the front line will all be eligible.
This temporary scheme is designed to provide an extra sense of protection and peace of mind for frontline workers during the coronavirus pandemic. Membership in the NHS Pension Scheme holds no bearing over whether your family will receive this particular benefit.
Make sure you’re protected
If you need help reviewing your NHS coverage and selecting supplemental protection plans, don’t hesitate to schedule a consultation with us. We’ll help you find the best coverage and incorporate your protection policies into your overall financial plan. Get in touch today.
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