Group Life Schemes

Employer Sponsored – Group Life Schemes

These schemes are mainly found in the Private Sector. Employers establish the schemes for the benefit of their employees. The employer pays the cost of the scheme and can write off the cost against corporation tax.

The scheme guarantees to pay out a lump sum, normally a multiple of salary, (e.g. 4 times Salary), in the event of the member’s death in service. It is also possible to provide for a dependent’s pension benefit on the death of the member in service.

The scheme is set up under trust. In the event of death the death benefit is paid to the Trustees and they pay this benefit to the member’s estate.

Voluntary – Group Life Schemes

These schemes are mainly found in the Public Sector. Under the Superannuation Pension Scheme structure employees normally have a lump sum death in service benefit of between 1 and 1.5 times salary in the event of death in service. The exact lump sum benefit is determined by length of service completed by the employee.

This lump sum death in service benefit may not be sufficient and Voluntary Group Life Schemes are designed to meet this shortfall. In addition to the benefit provided under your Superannuation Pension Scheme, this Scheme normally provides an additional death in service benefit of 2 times salary. These Schemes attract very competitive rates and the member’s contributions receive income tax relief at their marginal rate under the ‘net pay procedure’.

The scheme is set up under trust. In the event of death the death benefit is paid to the Trustees and they pay this benefit to the member’s estate.