Page 23 - Group Insurance and Retirement Benefit IC 83 E- Book

What happens if I die after retirement?
Benefits payable after the death of a pensioner in retirement vary considerably from

scheme to scheme. It is quite unusual for any benefit to be paid in lump sum form when
death occurs more than 5 years after retirement. Death in retirement benefits can be any

one or more of the following:

Guarantee
Many pension schemes provide a guaranteed minimum period for payment of your

benefits, whether you live or die. This period can be up to 10 years. However, if it is 5
years or less, then the remaining installments payable under this guarantee can be

translated into a lump sum payable to your dependants or estate instead. Pensions payable

to dependants may commence within the 5-year guarantee period. If the guarantee is
more than 5 years, the outstanding installments must be taken in pension form, and no

benefit payable to dependants may commence until after the period the guarantee has
expired.

Dependants’ benefits provided by surrender

Many pension schemes give a retiring employee the option to give up some of his/her

own personal pension to provide for a continuing pension to be paid to a dependant on
death after retirement. This is an option that has to be exercised before you actually retire.

The cost to you in terms of a reduction in your own benefits will depend on the age and
sex of your dependant, relative to your own age and sex. The older the dependant, the

less of your own pension you will have to give up to make this sort of provision. As
women generally have a longer life expectancy than men, it would cost more to provide

for a female dependant than for a male.

Dependants’ Pensions

Sometimes the scheme rules will provide for specific dependants‘ pensions to be paid on

your death after retirement, without any need for you to give up any part of your own
pension. These benefits may be payable immediately on the death of a pensioner, even