Most bp employees assume their pension will automatically find its way to their family when they die. The reality is more nuanced. And the gap between assumption and reality is worth closing now, not later.
There are two pensions to think about. Your defined benefit scheme and your Aegon DC pension. They work differently in death, and they need to be treated separately.
This article covers the DB Final Salary pension. For the DC scheme, see Who Gets Your bp TargetPlan Pension When You Die?
What happens to your bp DB pension when you die?
Death in service: the lump sum
If you die while still working at bp, the scheme pays a cash lump sum of four times your final salary.
That money does not automatically go to your spouse. The trustees of the bp Pension Scheme decide who receives it. They use your expression of wishes form to guide that decision. A clear, up-to-date nomination carries real weight. An outdated or missing one leaves the decision entirely with the trustees.
The survivor’s pension
Your spouse or civil partner receives an automatic survivor’s pension; that part requires no nomination. It is worth up to two-thirds of the pension you would have received at normal retirement age.
The children’s pension
There is also a children’s pension. Each child can receive 10% of your notional pension, rising to 20% if there is no surviving spouse, and capped in total at one-third of your pension. Again, trustees use their discretion, guided by your expression of wishes.
Death after retirement: the five-year guarantee
If you die after retiring, the five-year guarantee applies. Die within five years of your pension starting and before age 75, and your beneficiaries receive a cash sum covering the remaining payments in that window. The survivor’s pension continues regardless.
Does your expression of wishes cover your Aegon DC pension?
No, and this is the part most people miss. Your expression of wishes on the DB scheme covers the lump sum only. It has no bearing whatsoever on your Aegon DC pension. That requires a completely separate nomination, held directly with Aegon.
For many bp employees, the Aegon pot is significant. Without a nomination in place, there is no guidance for whoever is responsible for distributing it.
Two things worth doing today
Log into PensionLine at pensionline.bp.com. Check your expression of wishes is there and up to date. If your family situation has changed since you last looked at it, update it now.
Then ask yourself: do you have a separate nomination in place with Aegon for your DC pension? We’ve covered exactly how that works, and why it matters, in our bp TargetPlan Beneficiary Nomination article.
Who can you think of still working at bp who has never stopped to check their expression of wishes? Share this with them. A five-minute check today could make an enormous difference to someone they love.
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Want to learn more about how we help bp Leaders optimise their finances? Explore our bp services page here. If you’d like to discuss your specific situation, you can get in touch with our team directly.
This is for educational purposes only. It’s not personal financial advice and we’re not recommending any specific course of action. Everyone’s situation is different, and the right approach to pension death benefits depends on individual circumstances. You should seek professional financial advice before making any decisions.
While we have extensive experience helping bp employees and alumni optimise their benefits, Emery Little operates independently and is not affiliated with or endorsed by the bp group, including BP Pension Trustees Limited, on behalf of the BP Pension Fund. This allows us to provide objective, independent guidance focused solely on your best interests.
