Dependants' unsecured pension fund meaning

In practice, a dependants’ unsecured pension fund is the pot within a money purchase (defined contribution) scheme that, after a member’s death, is designated to pay income drawdown to a qualifying dependant who is under age 75. It is a UK pensions tax law term defined in the Finance Act 2004 (as originally enacted) for “dependants’ unsecured pension” (USP) arrangements. Key features include: designation of sums or assets held under the arrangement after death; payment of a pension to a named dependant without buying an annuity; investment risk and longevity risk remaining with the fund; and tax treatment governed by HMRC’s USP rules then in force (including limits and death benefit rules). The term focused on the dependant’s age at designation, though, under later regimes, tax often turns on whether the deceased died before or after age 75. The concept was superseded from 6 April 2011 by dependants’ capped drawdown and from 6 April 2015 by flexi‑access drawdown, but it may still appear in legacy documentation and transitional provisions. Usage and statutory definition are UK‑specific (England & Wales, Scotland and Northern Ireland). The term is not generally used in Irish pensions law, where post‑death drawdown is addressed under the Approved Retirement Fund...