Death in service

In this video we’re going to talk about a topic that no one really likes to think about, but one that’s really important for you and your family. It’s worth understanding what would happen to the pension if the serving person in your family were to die.

We’ll cover what support your loved ones could receive – both if death happens while serving, and after leaving the Forces. We’ll focus mainly on how this relates to the Armed Forces Pension Scheme 2015 (AFPS 15), because this is the scheme for all currently serving regulars and reservists from April 2022.

You can find out more about dependant’s benefits for legacy pension schemes, such as AFPS 75 and AFPS 05, on gov.uk. This isn’t about dwelling on the worst. It’s about feeling confident that your family would be looked after if something unexpected happened.

So, what happens if you die?

Under AFPS 15, your eligible dependants can receive benefits if you die. These may include:

A tax-free lump sum, and a taxable pension paid for life to your spouse, civil partner or eligible partner. Importantly, this pension is paid for life, even if your partner later remarries or forms a new relationship.

Dependants’ pensions are normally payable once you have completed at least two years of qualifying service. So who counts as an eligible dependant?

If you are married or in a civil partnership when you die, your spouse or civil partner would usually be eligible for a pension. A former spouse you are legally divorced from – or a dissolved civil partner – would not be eligible.

If you’re separated but not legally divorced or dissolved, your former spouse or civil partner may still be eligible, even if either of you were in a new relationship. That’s why legal status matters.

If your marriage or civil partnership took place within six months of your death, payment wouldn’t be automatic. Veterans UK would review the circumstances to make sure the marriage wasn’t entered into purely for financial reasons.

If you don’t have a spouse or civil partner, an eligible partner could still qualify – provided that they meet the following criteria:

1) you were in a substantial, exclusive relationship,

2) there was financial dependence or interdependence, and

3) there was no legal reason preventing you from marrying or forming a civil partnership.

That’s why it’s really important to keep your details up to date on JPA, as well as reviewing your nomination form regularly. It can make a really big difference to how quickly your family receives support should the worst happen.

What benefits are paid, and when? What your family receives depends on when your death occurs.

First, let’s look at Death in Service.

If you die while still serving, your spouse, civil partner, or eligible partner would receive an immediate pension for life and a tax-free lump sum.

The pension is based on what you would have received under a Tier 3 enhanced ill-health pension. Tier 3 awards are the most serious ill-health award. Your partner receives 62.5% of that amount. The lump sum is four times your final pensionable earnings, and this is paid even if you haven’t completed two years of service.

Second, let’s look at Death in Deferment – after leaving, but before your pension starts.

If you leave service with a deferred pension and die before it begins, your partner could still receive an immediate pension for life (62.5% of your deferred pension), and a tax-free lump sum equal to three times your annual deferred pension.

This isn’t automatic. Your family would need to contact Veterans UK to make a claim.

Lastly, let’s consider Death in Retirement.

If you die after your pension has started, your partner would receive an immediate pension for life at 62.5% of your pension. A tax-free lump sum may also be paid. This would be equal to five years of pension, minus anything you’ve already received. But only if you die within five years of starting your pension.

Again, this needs to be claimed by contacting Veterans UK.

What about children?

An eligible child is generally:

• under 18, or
• under 23 in full-time education or training, or
• any age if they cannot work because of a disability.

Children receive a pension for as long as they remain eligible. Normally, children share 37.5% of your pension benefits after your partner’s share has been paid. An only child will be eligible for 25%, and two or more eligible children share the remaining amount equally.

If there is no spouse, civil partner or eligible partner, children can share up to 100%, with a cap of 33.3% per child.

What if you have no dependants?

If you die with no spouse, partner, or eligible children, a tax-free lump sum would still be paid to your nominee or your estate.

Death in service is equal to 4 times your pensionable earnings. Death in deferment is 3 times your annual deferred pension. Death in retirement is up to 5 years’ pension (minus anything already paid).

This is why choosing a nominee for your lump sum is so important. It determines who receives this money.

Nominating your beneficiaries.

You can’t nominate who receives your pension. But you can nominate who receives the tax-free lump sum.

You can nominate:

• one person
• several people, or
• even an organisation

If you don’t make a nomination, the scheme follows a set order:

1. your spouse, civil partner or eligible partner
2. eligible children
3. your personal representatives (your estate).

A valid nomination can override this order, so keeping it updated really helps. You’ll find your nomination form by going to gov.uk.

Your nomination can become invalid for a number of reasons, such as:

• you divorce or remarry
• your nominated partner is no longer your partner
• your nominee dies before you, or
• your nominee is convicted of certain criminal offences, like the murder or manslaughter of you, the member.

Also, any marriage or civil partnership entered into on or after 1 December 2018 automatically cancels your existing nomination. So if you got married or entered into a civil partnership since then, you’ll need to complete a new nomination form.

Armed Forces Compensation Scheme.

Separate to your pension is the Armed Forces Compensation Scheme (AFCS). This provides compensation if your death is caused by service on or after 6 April 2005. This includes death during operations, training, exercises or service-approved activities.

Claims to this scheme must be made within seven years. For injuries or deaths before 6 April 2005, a claim under the War Pension Scheme must be made instead. You can find full details of both schemes on the MoD website.

Your Armed Forces pension doesn’t just support you. It can provide long-term financial protection for your family through pensions and tax-free lump sums if the unexpected happens.

Keeping your details and nominations up to date can make a real difference to how quickly and smoothly your loved ones receive support.

If the death of a serving or former service person occurs, you can find clear guidance including pension next steps – on the Veterans and Family Support section of gov.uk. And if you’d like to revisit the basics of AFPS 15, you can watch our video on how the Armed Forces Pension Scheme works.