Dependants’ death in service – DISP conversion

Working in a similar way to life assurance, death in service pensions give an employee’s dependants financial security should the employee die while in employment.  The pension provides a regular monthly income to a financial dependant based on the employee’s salary or prospective pension.

However, with the current economic climate of low interest rates as well as people living considerably longer, such products have become far more expensive for employers and trustees, with premiums increasing sharply year on year.

With the pensions landscape evolving and flexibility being important to employees, the traditional pension benefit may not be the right option and so alternative funding mechanisms may suit you and your employees.

Employers benefit from:

• A notable reduction in premium costs as lump sum rates are generally lower than the pension rates
• Greater market competition by approaching a higher number of life assurance insurers
• Less administration required than setting up the pension with the insurer or through the pension scheme

Dependants benefit from:

• A tax-free lump sum payment
• The elimination of the Lifetime Allowance and HMRC protection tax risks if set up on an excepted (non-registered) basis
• Improved financial flexibility to suit the needs of the employee’s dependants

How can Willis Towers Watson help you?

• Sophisticated actuarial modelling for conversion of pension into a lump sum payment to calculate the fairest outcome for both employer and dependant
• World class consultative broking to leverage our scale to obtain the best outcome for you in terms of price, structure and policy terms
• Design consultancy to meet the needs of your workforce and your budget
• Support with communication materials around pension and benefit change, particularly around design and implementation