Death in service and employer loans

Jaheira

I wasn't sure if this the correct place to post this - more of wanting to know rather than needing to address. 

If I have any loans with my employer and die in service, would my employer deduct this from my final salary payable if my death precedes payroll deadlines?

If the amount of the loan exceeds my last pay packet, can they deduct this from death in service lump sum or would it needed to be treated as a debt payable from my estate,

TIA J.

RAS

What are the terms of the loan? My employer sought to collect a loan over the last three months when I retired, although I was happy for them to take it as a lump sum.

Jaheira

RAS said:

What are the terms of the loan? My employer sought to collect a loan over the last three months when I retired, although I was happy for them to take it as a lump sum.

For example, season loan ticket.  I don't have any loans at present with my employer and when I have had these, they were spread over 1 year and deducted from my pay the following month of receiving the loan. 

Not to sound morbid, but I want to understand how potentially employers would deal with any outstanding loan payments if I were to die in service. 

J.

user1977

Can I ask why you want to know? Any outstanding loan would be a debt payable from your estate anyway. I doubt it would affect the salary payment immediately after death anyway just because of the short timescales involved.

Emmia

Jaheira said:

RAS said:

What are the terms of the loan? My employer sought to collect a loan over the last three months when I retired, although I was happy for them to take it as a lump sum.

For example, season loan ticket.  I don't have any loans at present with my employer and when I have had these, they were spread over 1 year and deducted from my pay the following month of receiving the loan. 

Not to sound morbid, but I want to understand how potentially employers would deal with any outstanding loan payments if I were to die in service. 

J.

Your season ticket would probably be eligible to have a refund if the unused time left on it, that money could be used to (at least partly) cover the loan, as long as someone is reasonably quick to do this.

Otherwise it is down to the terms of the loan from your employer (why not ask them, if it's not in the agreement??). On a less morbid front, what do they do if you leave your job? That would give you an indication of what they'd do if you died.

Alphatauri

You really do need to check with your employer.

I am no expert but think the death in service is a separate payment. 

WRT payroll what should happen is a reconciliation where they work out pay to date plus or minus annual leave, minus any loans etc. to get a gross figure. The gross figure can be a minus and so could result in a refund of tax etc. Any outstanding debt after this would then be treated as normal debt where they would write to the executor and ask for repayment. However, a sympathetic employer may decide to write the debt off. 

Jaheira

Thank you everyone for your replies. 

Alphatauri, I have enquired with my employer and am waiting for a response. 

msb1234

In most cases a death in service benefit is outside of the deceased estate if there is a named beneficiary.