Employers' Guide
Section 11 - Death of a teacher in service
Contents
1. Short term pensions 2. Payment of short-term pensions 3. Accounting arrangements 4. Income TaxWEB TV – Module 3 Death in Service
1. Short term pensions
Where a scheme member dies in pensionable service, any surviving beneficiaries will be entitled to a short-term pension. This short-term pension is paid by you. Before any short term pension is paid you must check the status of any adult beneficiaries other than a surviving spouse or registered civil partner with TP. In the case of a surviving spouse or registered civil partner you should see a copy of the marriage or registration certificate before issuing any payments.
Effectively, the short-term pension can be seen as a continuation of salary. Employers pay this as an expedient and recover the amounts from the TPS by deducting the amount from the monthly contribution return.
Scheme members who ceased teaching on grounds of ill-health but are not in receipt of retirement benefits from the TPS and die within 12 months of their last day of teaching service are entitled to a short-term pension. This is paid by TP.
When a teacher dies in service, the employer must:
- Inform TP by e-mail or telephone of the teacher's name, reference number, date of death and the name and address of the next of kin; and
- Put into payment any short-term pension.
The application form for death benefits should be completed by the next of kin. This form can be obtained from TP if you do not hold a copy of it.
Back to the top2. Payment of short-term pensions
A short-term pension begins on the day following the teacher's death and is payable at the rate of the teacher's salary at the time of death. Should a retrospective increase in salary become due the short-term pension should be adjusted.
A short- term pension is payable to:
- the teacher's spouse, registered civil partner, nominated partner, or nominated adult dependant; and
- to the child or children of a member.
If the teacher has no spouse, registered civil partner, nominated partner, nominated adult dependant or children a short term is not paid.
A child is a person while he or she is unmarried and
- has not attained the age of 17, or
- having attained that age is receiving full-time education or attending a course of not less than 2 years' full-time training for a trade, profession or calling and has done so since attaining that age without a break at any one time of longer than a year but has not attained the age of 23; or
- is incapacitated at the time of the death of the teacher and unable to earn a living because of ill-health.
A child includes:
- a legitimate or illegitimate child born during the member's lifetime or within 12 months of the date of the member's death; and
- an adopted child.
This pension is paid for a period of 3 or 6 months at the rate of the member's final salary less any deductions in respect of income tax. National Insurance contributions should not be deducted from short-term pensions. The payment arrangements are shown in the table below:
Spouse or registered civil partner or adult nominated dependant or partner |
3 months @ member’s monthly salary less any income tax |
Spouse or registered civil partner or adult nominated dependant and children or partner |
3 months @ member’s monthly salary paid to the adult beneficiary less any income tax 3 months @ member’s monthly salary paid to child(ren) (the same amount is payable regardless of the number of children)
|
Child(ren) only |
6 months @ member’s monthly salary (the same amount is payable regardless of the number of children) |
For example:
Teachers Final Salary = £36,000.00
Monthly Gross Salary =£ 3,000.00
Gross short-term pension payable is: £3,000 a month for spouse or registered civil partner or adult nominated dependant for 3 months. This amount is subject to tax.
£3,000 a month for child(ren) for 3 months
If no surviving spouse, registered civil partner or nominated partner:
£3,000 a month for child(ren) for 6 months
If the member was on a regular part-time contract at the time of death, the short-term pension will be based on the same percentage of the full-time contract. If the member was not on a regular part-time contract the short-term pension will be paid at the full-time rate.
Back to the top3. Accounting arrangements
You should recovery the value of the short-term pension paid to the beneficiaries by deducting that sum from the next monthly pension contributions remittance. You will need to record this on the remittance advice.
Back to the top4. Income Tax
Short-term pensions paid to adults will be subject to PAYE income tax deductions. Employers should take the following action:
- send Form P46 for the adult to the local Inspector of Taxes together with Form P45 in respect of the dead teacher;
- create a record in the adult's name and deduct tax from the short-term pension using the tax code BR supplied by HMRC for emergency use until further directions are obtained or received from the tax office;
- when the final payment of the adult's short-term pension has been made, complete form P45, send part 1 to HMRC and part 2 and 3 to the dependant;
- the short-term pension payable in respect of a child is regarded as income of the child and the local Inspector of Taxes should be notified of the amount in all such cases; and
- where any arrears are paid after the normal payment of short-term pension has been completed, e.g. due to a retrospective increase in the deceased teacher's salary, tax should be deducted by reference code BR.
