Dependants' short-term annuity meaning

FORTHCOMING CHANGE: The Finance Bill 2025–26 proposes rules that will draw unused pension pots and death benefits into a deceased member’s estate, and therefore into the inheritance tax (IHT) net, from 6 April 2027. It should be noted that these changes will not extend to death‑in‑service payments to active employees in relevant employment, nor to a dependant’s scheme pension (that is, a DB scheme pension for a spouse or dependant). The usual exemptions, including those for spouses and civil partners, will continue to apply. Liability for settling the IHT will principally sit with the personal representatives of the estate. For more detail, please see Practice Note: Inheritance tax and pensions; News Analyses: HMRC—Reforming inheritance tax—unused pension funds and death benefits; HMRC confirms new IHT rules on unused pension funds to apply from 6 April 2027; and HMRC policy paper: Inheritance Tax: unused pension funds and death benefits (November 2025). If a member of a registered pension scheme that offers flexible benefits dies whilst in drawdown (via income withdrawal...

THIS PRACTICE NOTE RELATES TO DRAWDOWN PENSIONS COMMENCING BETWEEN 6 APRIL 2011 AND 5 APRIL 2015 (INCLUSIVE) ARCHIVED: This archived Practice Note outlines the legal framework that applied to drawdown arrangements begun on or after 6 April 2011 and before 6 April 2015, whether by way of income withdrawal or a short-term annuity. It is no longer maintained. For details of the regime for drawdown arrangements starting on or after 6 April 2015, see Practice Notes: Drawdown from 6 April 2015 and Drawdown and death benefits from 6 April 2015. What is a drawdown pension? The term ‘drawdown pension’ replaced the earlier labels ‘unsecured pension’ and ‘alternatively secured pension’ used before 6 April 2011. Up to 5 April 2015, drawdown pension described the process for paying pension which enabled members who were: already receiving benefits from a pension arrangement (either a pension paid by the scheme or an annuity purchased with the member’s scheme funds), and entitled to benefits in other pension arrangements,...

This precedent has been produced on the basis that the drafter is acting for the buyer. The following warranties have been prepared for a transaction where: The Buyer will provide pension benefits through its own arrangement or via an appointed provider; and Employees’ past service benefits will not be transferred to the Buyer’s arrangement. You are strongly advised to involve a pensions specialist at the earliest opportunity. 1 Definitions For the purposes of paragraphs 2 to 7 inclusive: Employee means [ [specify as necessary, either by category or by named individuals ]; Pension Scheme [ s ] mean [ s ] [ [ name(s) of scheme(s) ] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or similar benefit to be given on retirement, long-term ill-health or death, or pursuant to a pension sharing order, in relation to the service or historic service of an Employee or any other person, or...

This precedent is prepared on the footing that the drafter acts for the Seller. It is prepared on the basis that the target company (the Company) is a subsidiary of the Seller. It is strongly recommended that a pensions specialist is engaged at the earliest opportunity. 1 Definitions For the purposes of paragraphs 2 to 12 (inclusive), the following definitions set out below shall apply: Employee means any current or former employee, officer, or director of the Company [ or of any Group Company ] [ and any other individual involved in the management of the Company’s affairs ] ; Pension Scheme means any arrangement or practice providing for, or contributing towards, an annuity, pension, lump sum, gratuity, or similar benefit on retirement, long-term ill-health, or death, or pursuant to a pension sharing order, arising from the service or historic service of an Employee or any other person, or for the benefit of that individual’s dependants; and Pension Schemes shall be construed accordingly......

This template is prepared on the footing that the drafter acts for the buyer. The warranties below are framed for a transaction where the Buyer: chooses to mirror pension entitlements for transferring Employees within the same pension scheme by executing a deed of substitution to participate and take on responsibility for the scheme, or agrees to accept a transfer of Employees’ past service benefits from the Seller’s pension scheme into its own scheme. You are strongly advised to engage a pensions specialist at the earliest opportunity. 1 Interpretation and definitions For the purposes of paragraphs 2 to 7 (inclusive): [ Employee means [ define as required, either by class or by naming individuals ]; ] Pension Scheme [s] mean[s] [ [ insert name(s) of scheme(s) ] OR any arrangement or practice for the payment of, or contributions towards, an annuity, pension, lump sum, gratuity or comparable benefit provided on retirement, long-term ill-health or death, or under a...