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What will loved ones and beneficiaries receive?

To help you keep planning for the future, it’s important to know what will happen to your benefits and savings when you die

Your loved ones could be eligible to receive benefits when you die

Although you’ve retired, it’s important to keep planning for the future. There may be actions you could take to help the savings you’ve built up look after your loved ones once you’re gone.

It’s important you know how the USS benefits that can enable you to support those close to you can change as you move through retirement.

Your first five years of retirement

If you die within the first five years of retiring, a lump sum may be payable. Generally, it will be broadly three times your annual salary (or the salary threshold, if you earn above it) at the time you retire, minus any lump sum benefits and pension already received.

Any lump sum from the Retirement Income Builder will be subject to a cap of the balance of pension and lump sum payments due between the date of death and the point five years after you retired (based on the rate of your pension at the date of death).

You’ll need to log in to My USS and regularly update your Expression of Wish form during your first five years of retirement, to tell us who you’d like to receive the lump sum.

Did you know a lump sum could go to...?

  • Someone nominated by you

    It could be a relative, dependant, personal representative or someone else

  • More than one person

    You can choose how you would like the lump sum to be divided

  • A charity or other organisation

    It doesn’t have to be a person at all if there’s something close to your heart

Payment of the lump sum is made at the discretion of USS but your wishes are, of course, taken into consideration. As the payment is discretionary, it means it is not subject to inheritance tax.

Beyond five years of retirement

If you die five or more years after retiring, there will be no lump sum payment from the Retirement Income Builder. No matter what point of your retirement the worst should happen though, your loved ones could receive support from your pension.

A pension for your loved ones

  • They’ll get a pension for life of half the standard pension you’d have got when you retired, plus any USS standard pension increases up to when you die.
  • A standard pension is your pension income plus a one-off cash lump sum of three times your pension amount, as outlined in your retirement quote. If you took a higher or lower lump sum, your spouse/civil partner’s pension will still be based on your standard pension.
  • If you paid in to USS for at least five years, your spouse or civil partner will receive your full pension for the first three months. After three months, they’ll get half your standard pension.
  • Your spouse or civil partner’s pension could be different if you’re not living with them when you die. Part of it could be payable to a dependant instead.
  • If you’re married or in a civil partnership, you don’t need to complete a form to register your partner with USS – we’ll gather the relevant information when you die.

  • Complete a Registration of potential dependant form in My USS to tell us who you’d like to receive your pension when you die. You should do this regularly so we know it’s up to date, even if your wishes haven’t changed.
  • What they may get won’t be more than what a spouse or civil partner would get.
  • We’ll check their dependency when you die and agree the amount they’ll get based on their level of dependency. We’ll need some evidence from them to show either their financial dependency at the date of your death or, if they were dependent on you due to physical or mental disability, evidence of this disability.

  • If eligible, your children are entitled to a pension of up to 75% of the standard pension you’d have got when you retired, plus any USS standard pension increases up to when you die.
  • If you have one eligible child they’ll get half (37.5%), and two or more will share the 75% between them. This is payable in addition to a spouse, civil partner or dependant’s pension.
  • They must be under 18 or, if they’re in full-time education or full-time training, under 23. Children of any age who are not able to support themselves financially due to a physical or mental disability are included.
  • Eligible children over the age of 18 must have the pension paid into their own bank account.
  • Your children could receive an increased share of your pension if you aren’t married or in a civil partnership and don’t have a dependant.
  • You don’t need to register your children – we’ll gather the relevant information when you die.
  • An eligible child could be your lawful child, including those not yet born, or those legally adopted by you, or a child who’s financially dependent on you like a stepchild.

If you have Investment Builder savings

There are two parts to USS. The Retirement Income Builder – the defined benefit part (DB) – provides you with a guaranteed income for life in retirement; and the Investment Builder – the defined contribution (DC) part – provides you with a savings pot which you’ll have been able to flexibly access since age 55 (including if you’ve switched your Prudential Money Purchase AVCs).

Any Investment Builder savings that remain invested when you die will be paid to your beneficiaries. They’ll usually be tax-free if you die before age 75, or taxed at the recipient’s marginal rate if you die after age 75.

You’ll need to continue updating your Expression of Wish form after your first five years of retirement if you have savings remaining in the Investment Builder. This will tell us who you’d want those funds to be paid to.

To find out more, take a look at the What happens to my savings and benefits if I die after I’ve retired? factsheet.

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