Executive Pension Term Assurance is life insurance paid for by the employer. It will leave a lump sum for the family of the employee if they die before retirement age.
Aviva Executive Pension Term Assurance cover at a glance:
Provides financial security
Provides a lump sum for the family if life assured dies before retirement
Tax Relief
Premiums are allowable as a business expense
Tailored Policies
Customise the policy to suit your client's specific needs
Aviva Care
Includes access to Aviva Care for the life assured
Product information
Why would you need it? Show moreShow less
The purpose of this cover is to allow an employer to provide a benefit to employees, giving them security should they die while in employment. A benefit can be payable, which may include a death-in-service lump sum, spouses’ or dependents’ pensions, and the creation of an Approved Retirement Fund for a beneficiary.
This cover is arranged under a one-member occupational pension scheme and is available to employees whose employers wish to put such an arrangement in place. The policy is held under irrevocable trust by way of a Letter of Exchange, with the Trustee acting as the policy owner. The Trustee takes out the policy on the life of the member and is responsible for arranging payments to the relevant beneficiaries in the event of the member’s death. For an Executive Pension Term arrangement with Aviva, the Trustee must be the employer.
What can the proceeds be used for?Show moreShow less
The proceeds can provide the family and dependents with a lump sum, a spouses’ or dependents’ pension, or an Approved Retirement Fund (ARF) to help cover ongoing bills and living expenses if the life assured dies before their normal retirement age.
How much cover is needed?Show moreShow less
The life cover sum assured depends on personal circumstances. In the event of death-in-service, Trustees must comply with Revenue rules regarding the maximum allowable death-in-service lump sums and arrange spouses’ or dependents’ pensions with any residual funds.
What are the requirements to set up the policy?Show moreShow less
1. Check eligibility – The member must be registered as an employee of the scheme’s employer with Revenue and receive a salary taxable under PAYE. Proof of income (payslip or Employment Detail Summary) is required for Revenue approval.
2. Decide how much cover is required - Based on current earnings.
3. Decide on the term of the plan - It must match the Normal Retirement Age (NRA) for any linked occupational pension schemes. The maximum age allowed is 70.
Premiums paid by the employer are usually allowable as a business expense and are not treated as a ‘benefit in kind’ for the employee.
Are the proceeds taxable?Show moreShow less
How the proceeds are paid on death:
Death-in-service Lump sum Limits
If the insured employee dies in service before their normal retirement date, the Trustee must arrange for the payment of a benefit equal to the value of the insured benefit. Nomination of beneficiaries can help streamline the payment process. This can be done by completing a “Letter of Wishes” form which is available online (here). This should be updated whenever the employee’s circumstances change e.g. marriage, birth of children or divorce. While trustees may consider these instructions, they are not legally bound by them and retain discretion over the final distribution.
Revenue Limits on Lump Sum Payments
On death-in-service, Trustees must follow Revenue guidelines for the maximum allowable lump sum. Any remaining funds beyond this limit must be used to provide a pension for a spouse or dependent, either through:
- Purchase of an annuity,
- or Investment in an Approved Retirement Fund (ARF).
Maximum Lump Sum Calculation:
Greater of: €6,350 or 4 × final remuneration less retained benefits
Where multiple schemes exist under the same employment (e.g. separate occupational pension schemes or Personal Retirement Bonds), all benefits must be considered when calculating the maximum lump sum.
Retained benefits
The maximum lump sum must be reduced by any retained benefits (from the value of pension arrangements linked to other employments.)
* If lump sum ≤ 2 × final remuneration, retained benefits do not need to be deducted.
Additional Lump Sum Payments
Trustees may also approve the payment of a refund of:
- Employee contributions
- AVCs (including interest) from other schemes linked to the employment.
These can be paid in addition to the death-in-service lump sum.
Final Remuneration Definitions
Definition (i): (a) Basic remuneration over any 12-month period in the five years preceding the relevant date (in this case, date of death), plus (b) The average of any fluctuating remuneration over three or more consecutive years ending on the same date as (a).
Definition (ii): The average of total emoluments for any three or more consecutive years ending not earlier than ten years before the relevant date (date of death).
Definition (iii): The rate of basic pay at the relevant date (date of death) or at any date within the year ending on that date plus the average of any fluctuating emoluments calculated as in (i) above.
Special Rule for 20% Directors
Definition (ii) However, in death-in-service case, Revenue allow final remuneration based on rate of pay at date of death.
Aviva Care
Powered by Teladoc Health, Aviva Care provides you with GP support services to help you feel better, gives you access to world leading medical experts and supports your mental wellbeing. What’s more, these services come free of charge to you.
Download the Aviva Care app
Download the Aviva Care app from the App Store or Google Play Store. Open the app and login using your email address and password – or register for the service using your email address and policy number or access code.
About Aviva Care
Through Aviva Care you have access to Digital GP, Best Doctors Second Medical Opinion, Family Care Mental Health Support & Bereavement Support, and GetFit.
Aviva Life & Pensions Ireland Designated Activity Company, is a private company limited by shares, registered in Ireland No. 165970. Registered office at Building 12, Cherrywood Business Park, Loughlinstown, Co. Dublin, D18 W2P5. Tel (01) 898 7950, www.aviva.ie
Aviva Life & Pensions Ireland Designated Activity Company, trading as Aviva Life & Pensions Ireland and Friends First, is regulated by the Central Bank of Ireland.
Aviva Life & Pensions Ireland does not guarantee the on-going availability of any or all of the Aviva Care Ireland services to its policy holders and may, at its sole discretion, withdraw access to the service at a month’s notice. If we withdraw it, we’ll write to notify policy holders at least 30 days in advance of its removal.
Teladoc Health, who provide the Aviva Care services, is not a regulated entity. Aviva Care is not a regulated service.
Aviva Life & Pensions Ireland Designated Activity Company, is a private company limited by shares, registered in Ireland No. 165970. Registered office at Building 12, Cherrywood Business Park, Loughlinstown, Co. Dublin, D18 W2P5. Tel (01) 898 7950, www.aviva.ie
Aviva Life & Pensions Ireland Designated Activity Company, trading as Aviva Life & Pensions Ireland and Friends First, is regulated by the Central Bank of Ireland.
