Life Cover Only Members: Provision of life cover in separate scheme


Following the publication of the Pensions Regulator's guidance on life cover one key question remains - is it permissible for an employer to provide life cover for employees through one scheme, and pension benefits through another?

DWP Note

The DWP Note states that:

Where there is a link between the provision of death-in-service benefits and the provision of retirement benefits provided by a third party, it is thought that, it might be possible to argue that the supplementary test in Article 6(d) would be satisfied. The Department considers that this possibility would require an identifiable and concrete link between the provision of the two benefits, so that the two benefits are part of an overall arrangement provided by an employer in the employment relationship. The ancillary test would also have to be satisfied, and the mere fact that both benefits are available would not be sufficient to satisfy the test.

Regulator's Guidance

The Regulator's Guidance says the following:

it is possible that this may not infringe the terms of section 255 …provided that there is a sufficient concrete and identifiable link through the employer between the provision of the lump sum death benefits under the one scheme, and the pension benefits under the other scheme. Such a link would need to be stronger than the simple fact that the two schemes were set up and run by the same employer." (our emphasis)