The police schemes provide a return of the officer's aggregate pension contributions on death, less any payments made or due to the officer on account of his or her pension and the capitalised value of any pension or allowance granted in respect of the officer's death.
This guidance relates to the determination of the capitalised value of the long-term survivor's pension. Any short-term increase in the level of survivor's pension must be taken into account in addition to the capitalised value of the long-term pension.
Please note that the factors in this note should be applied to total pension, including any accrued Guaranteed Minimum Pension (GMP). Separate factors for GMP are not required.
The capitalised value of the survivor's pension can be calculated as follows:
Capitalised value of survivor's pension = Pw × Fw
where
Pw = annual pension in payment to a dependant
Fw = factor for pension in payment
Factors for this calculation should be taken from Table 3.
For cases where the surviving dependant has not yet attained age 60, a simple rule of thumb can be used to determine whether or not more detailed consideration is required.
A death gratuity will not be payable if the capitalised value of the survivor's pension plus the value of other benefits paid to the member or surviving partner as described in the relevant regulations exceed the member's aggregate contributions.
For individuals below age 60, if multiplying the surviving dependant's pension in payment by a Rule of Thumb Capitalisation Factor (RTCF), which can be found in Table 4, gives a value greater than the member's aggregate contributions, then it is safe to conclude that a death gratuity will not be payable, even before assessing the value of any other benefits that might be payable/have been paid.
If the rule of thumb is not satisfied, you should extend consideration to all other relevant benefits that fall under the appropriate regulations.
If the rule of thumb is not satisfied and aggregate member contributions still exceed the assessed value of all relevant benefits under the regulations, a bespoke calculation, not covered by this guidance, is required.
Please note that administrators are responsible for ensuring that payment of the death gratuity is compliant with relevant pensions taxation legislation, and administrators should seek further advice as necessary.
This guidance does not cover the capitalised value of children's pensions. These cases require a bespoke calculation, not covered by this guidance.
