Death in Service Benefit

[DJM10118]

Dear All,

I am looking for some advice of a slight issue with my company. Recently we have a meeting regarding our pensions as they are due to change in a few years. One thing that came up in the conversation is that my company has a policy to cover death in service, however this is not paid to the employees spouse in the event of death, and is actually paid to the company.

Having spoken to my Manager, who has been with the company 13 years and other colleagues, it would seem that everybody was led to believe that this would be paid to our spouse. I am also sure that when I joined the company pension I signed a form to illustrate who would receive my death in service payment, however my company say they don't have this document.

I work as a sales engineer who is on the road all day and I believe I am possibly more at risk than somebody working in an office all day and I should be entitled to this benefit paid to my spouse and family.

Any help would be appreciated

[Streetwise]

Re: Death in Service Benefit

Dear All,

I am looking for some advice of a slight issue with my company. Recently we have a meeting regarding our pensions as they are due to change in a few years. One thing that came up in the conversation is that my company has a policy to cover death in service, however this is not paid to the employees spouse in the event of death, and is actually paid to the company.

Having spoken to my Manager, who has been with the company 13 years and other colleagues, it would seem that everybody was led to believe that this would be paid to our spouse. I am also sure that when I joined the company pension I signed a form to illustrate who would receive my death in service payment, however my company say they don't have this document.

I work as a sales engineer who is on the road all day and I believe I am possibly more at risk than somebody working in an office all day and I should be entitled to this benefit paid to my spouse and family.

Any help would be appreciated

Good Morning, 5 years ago i received a Death in service payout when my partner died,she had nominated me for the payout,i found the form in her personal paperwork and had to take it to her pension provider they explained to me what it was and i was paid out within 2 weeks.

May i just add that i did not receive my partners pension as we were not married,i had 2 children to bring up and without the Death in service payment would have realy struggled.

Maybe better to speak to your Pension provider and find out what the position actually is.

WHY WOULD IT BE PAID OUT TO THE EMPLOYER,

Regards Streetwise.

[DJM10118]

Re: Death in Service Benefit

Thanks streetwise.

I do have a company pension which was changed to a different provider some 3 years ago and I know that I have nominated my wife as the recipient of the pension fund, although I do not believe this is the same as death in service benefit.

I have spoken to my wife who works in HR for a large building society and she thinks this situation if very unusual as she has signed a form to nominate me as the recipient of the death in service benefit.

I have looked back at my old pension documents and there is a section which states a lump sum will be paid equal to the pension fund, however I do not think this is the same as DIS, which is usually 3x final salary. Even if I pay my pension for the next 25 yrs it will only just be equal to 3x my salary.

It is apparently paid to the company to cover the cost of reemploying, although I have again spoken to my wife who said that although the costs are reasonably high it is nowhere near 3x salary, so what happens to the rest of the monies?

Surely if I am putting myself at a greater risk by driving 25000miles per annum, then I think the company should have some DIS benefit for my family.

Sorry to hear about your partner.

Cheers

[davec1960]

Re: Death in Service Benefit

Are you sure there hasn't been a misunderstanding?
When I was co owner of a company there was a death in service policy for the employees.
The employees signed a form nominating the person they wanted the payout to be made to, however this wasnt binding and the two directors had the power to pay out a different person.
This was quite sensible as it covered for various scenarios where someone doesn't fill out a new form
Eg person names wife/husband but goes through divorce and meets new partner.
Young employee names mum and dad but subsequently marries and has a family.

In these cases it is more likely that the new partner/family would be the preferred beneficiary and we would have been able to ignore the original form.

We did ask our broker about the scenario of an unscrupulous owner paying himself, he explained that the insurance company wouldn't just pay out to anyone and would want to be satisfied as to the reasons for the change of beneficiary.

[DJM10118]

Re: Death in Service Benefit

Thanks dave C

When you say you had a death in service policy, was this different to the pension fund i.e. 3x salary paid out to family and in addition to any pension fund accrued?

Apparently the death in service policy which the company setup was never meant to be paid to family members of employees. We are quite a large Japanese multinational manufacturer, however we only have a relatively small UK office (20 persons). As I said before my manager has been with the company 13 yrs and other members over 10 yrs and they all suggested that this isn't what they have been led to believe over the years

Something just doesn't sound right to me. Why should the company benefit from my death? Better check my brake lines before I get on the road!

I guess I need to speak with the pension provider to find out exactly what is paid and to whom. As far as I am aware my wife gets my pension fund should I die prior to retirement, but not sure what happen after retirement.

[des8]

Re: Death in Service Benefit

There seems to be confusion over some of the terms being used.
Death in Service was traditionally part of the benefits package from the employer and the employee nominated the beneficiary.
However as the cover was arranged (generally) as a discretionary trust the employee could not be certain of who would benefit.(Hence the broker's comment [post 4])
This would be on a group life insurance policy for the benefit of employees

The other insurance would be "Keyperson Insurance" which covers a business against loss to that business caused by the death of an employee.

I'm pretty sure that if the employer was insuring the lives of his employees , with the intention of retaining the benefits for himself, he would be in breach of the various Gambling Acts
that regulate life insurance. As you indicate the company may not benefit from your death through effecting a life insurance, they can only cover their losses.

In your first post you suggest you heard about this problem through a casual conversation.
Have you actually made an official written enquiry off HR about your whole benefit package?
It is quite possible that this is a case of "Chinese Whispers", and your fears will be allayed on receipt of their written response.
If the benefits are not as you thought at least you will know exactly where you stand.

[DJM10118]

Re: Death in Service Benefit

Hi Des

Thanks for the information. Looks like I need to get my head around it a little and speak with our outside HR consultants and pension provider. I noticed in my contract of employment under the pension section it refers to a "Benefits Summary", although I do not have a copy of this so I will speak to HR

Cheers