UK: Dependants’ Benefits

Last Updated: 18 July 2005
Article by Keith Webster

The Pensions Ombudsman made some useful comments in a recent determination about the payment of death benefits and, in particular, how trustees should exercise their powers in relation to dependants’ benefits. This article looks at the implications of the Ombudsman’s views.

In 1996, a member nominated his sister to receive a lump sum death benefit in the event of his death. The member died in 2000 without having updated the nomination or leaving a will. His parents were his next of kin under the intestacy laws. The trustee decided to award the lump sum death benefit and a dependant’s pension to the member’s fiancée.

The decision to award the dependant’s pension was based on the belief that the fiancée fell within the scheme’s definition of "Dependant" as she had been unable to maintain the same standard as living that she had as enjoyed on a joint income with the member. The decision to pay the fiancée the lump sum death benefit was also based on the fact that she was a Dependant of the member and that the member had started to live with her after the date of the original nomination and had lived with her for the three years preceding his death.

The definition of a "Dependant" under the scheme rules included "any individuals who in the Trustee’s opinion are financially dependent on the Member... or dependent on the Member... because of disability, or were so dependent at the time of the Member’s… death or retirement… An individual may be financially dependent on a Member… if he relied upon such Member’s…income to maintain the standard of living he was enjoying at the time of the Member’s… death."

Meaning of Dependant

The member’s family argued that the member’s fiancée did not qualify as his Dependant. They claimed that there was no financial dependency; referring to the fact that the couple had separate bank accounts, all household bills were in the member’s name, the fiancée only contributed what the family called "rent", the fiancée went on holiday without the member and the fiancée had moved to a better paid job.

The Ombudsman rejected the family’s complaint and found that the trustee was correct to decide that the fiancée was the Dependant of the member. The Ombudsman noted that financial dependency would include circumstances where a surviving partner was unable to maintain the lifestyle that they had enjoyed prior to the member’s death. In particular, the Ombudsman stated:

"the surviving partner does not need to show that she will be left destitute in order to qualify for a Dependant’s pension… Any compromise in the lifestyle she had previously enjoyed as part of a couple, e.g. having to move to a smaller flat or having to take a lodger, would be sufficient to qualify the surviving partner for a Dependant’s pension."

The fact that the fiancée had moved to a higher paid job was a relevant factor that the trustee might have taken into account when considering the test of financial dependency (had it been in possession of this information at the time). However, the change of employment would have had to result in "a considerably higher salary for [the fiancée] not to notice the difference between a joint income and a single income".

The Ombudsman did not believe that the existence of separate bank accounts or the fact that all household bills were in the name of the member caused the fiancée to fall outside the definition of Dependant.

Relevant and irrelevant factors

In his determination, the Ombudsman restated the general legal position that trustees must only consider relevant factors when exercising their discretionary powers. If they fail to consider relevant factors or take into account irrelevant factors, their decision can be overturned.

The member’s family argued in this case that the actions and frame of mind of the fiancée following the member’s death should have led the trustee to decide not to pay the benefits to the fiancée. It would appear that the family and the fiancée fell out following the member’s death which, presumably, encouraged the complaint to the Ombudsman. However, the Ombudsman held that the state of mind and actions of the fiancée were not relevant and so the trustee was correct not to take these factors into account. Of course, in other circumstances the actions of a beneficiary might be relevant if those actions indicate that there was not, in fact, financial dependency at the time of death. The Ombudsman also rejected the claim that the trustee was unduly influenced by the fact that the fiancée used to work for the scheme’s sponsoring employer and relied too heavily on information provided by former colleagues. The Ombudsman accepted that it is not unusual for some beneficiaries to be better known to trustees than others. Trustees inevitably receive information from many sources, including friends and colleagues, and some of that information may be speculation and opinion. It was not unreasonable for the trustee to accept the opinion of a colleague of the member who stated that the marriage to the fiancée would have gone ahead in a matter of months if the member had not died suddenly.

Trustee’s procedure

One of the many allegations made against the trustee in this case was that the meeting at which the original decision was taken did not actually take place because there were no minutes of it.

Whilst the Ombudsman rejected the allegation, the case does emphasise the importance of keeping adequate records of the information considered by trustees and any advice received, and of having a formal record of the decision reached by them.


One point raised with the Ombudsman was the fact that the complaint may not have been within his jurisdiction at all. The legislation refers to the possibility of claims being brought by members and "the widow or widower, or any surviving dependant, of a deceased member of the scheme". In this case the complainant was the member’s sister who was not claiming to be dependant on the member and who therefore had no grounds for a complaint. Nevertheless, the Ombudsman found that the complaint was within his jurisdiction.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 27/06/2005.

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