Page 24 - Group Insurance and Retirement Benefit IC 83 E- Book

though a 5 year guarantee might still be in force, or they may begin payment after the

guarantee expires.

Marriage after Retirement
Generally speaking, pension schemes which provide spouses‘ pensions on death after

retirement cater only for the spouse to whom the pensioner was married at the time
retirement took place. The same usually applies in the case of other nominated

dependants – payment will be confined to the dependant/s nominated at the point of

retirement. However, you should check the rules of your own scheme for precise
information in this area.

How are my death benefits treated for tax purposes?
As has already been stated benefits are taken into account for tax only when they come

into payment. Any benefits which the Revenue Commissioners allow to be paid as lump
sums in normal circumstances are not taxed. Benefits payable in pension form are subject

to tax under the PAYE system, so the tax payable on them will be determined by the
individual tax position of whoever is receiving the payment.

There is another tax to which death benefits can be exposed. Benefits paid on death are
regarded as part of your estate for the purposes of Inheritance Tax, even though you

cannot normally control who gets these benefits by means of your will.

For the purposes of inheritance tax, death benefits are treated like every other inheritance.
The amount of tax payable (if any) depends on who is receiving the benefit and the

relationship to you. For example, if the only beneficiary is your husband or wife, no

inheritance tax would be payable. If a child or children receive the benefit, anything they
get from the pension scheme will be added to whatever else they have inherited for the

purpose of calculating whether they are liable to tax or not. The thresholds for relatives

other than children are low and, for non-relatives, even lower still. In summary, therefore,
if your death benefit is inherited by anyone except your lawful spouse, there is at least a

possibility that inheritance tax will be payable.