LGPS: Administering authority decision-making re death in service benefits

Death in service benefits - A valuable benefit

The Local Government Pension Scheme (LGPS) provides a lump sum death in service benefit (or “death grant”) which is valued by employees and their families, providing financial help at the most difficult of times.

The decision-making process is critical

Under The Local Government Pension Scheme Regulations 2013, the administering authority of the relevant LGPS fund has a wide discretionary power to decide who will receive the benefit. The administering authority has a legal duty to make any payment in compliance with Regulations and other relevant laws. The Regulations provide that the appropriate administering authority may “at its absolute discretion, pay the death grant to or for the benefit of the member's nominee, personal representatives or any person appearing to the authority to have been a relative or dependent of the member”.

The legal framework is complex and is continuing to evolve. The employee may have completed and submitted an expression of wishes form before their death, however, it is never right for the lump sum benefit to be paid automatically in accordance with the deceased employee’s expression of wishes form without any other consideration / investigations or decision making.

It is essential in all cases to follow an appropriate process, to maintain adequate records and to communicate with the interested parties. Some death in service cases are straightforward for the administering authority and they are able to choose the recipient of the benefit with relative ease. Many cases are far more difficult and require detailed due diligence enquiries and a meticulous decision-making process.

Increasingly, payment decisions are challenged by disgruntled potential beneficiaries. The consequences of a successful challenge can be serious. The administering authority may have to review their original decision and may then decide to pay the lump sum to a different beneficiary. In the worst-case scenario, if the original payment cannot be recovered, there may be financial consequences for the administering authority who may need to provide the funds for the second payment.

Lawyers in Weightmans LLP’s specialist LGPS team have extensive experience of providing advice and support to administering authorities in this area. We can help the administering authority to ensure that a robust decision-making process is followed and an appropriate payment decision is made.

We have a well-established service for supporting decision makers in relation to the payment of death in service lump sums by:

• Making enquiries (including with family members) to identify potential beneficiaries and to gather further relevant documents and information;

• Preparing a report to the decision maker, summarising the facts of the case; referring to the relevant Regulation, identifying potential beneficiaries; and making a recommendation as to the recipient(s) of the benefit (and their shares);

• Supporting the decision maker in making the payment decision;

• Preparing a minute of the payment decision meeting (where a meeting was required under the administering authority’s procedure);

• Verifying the identity of the beneficiary and carrying out a bankruptcy search;

• Preparing letters to be issued to the interested parties to inform them of the decision