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    • JBone78
    • By JBone78 7th Jun 17, 9:23 PM
    • 6Posts
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    JBone78
    Deferred military pension - lifetime allowance
    • #1
    • 7th Jun 17, 9:23 PM
    Deferred military pension - lifetime allowance 7th Jun 17 at 9:23 PM
    Hi all,

    Looking for a little help please!

    I left the Army in 2007 with a preserved pension (this is a final salary scheme). At that time it was worth approx £9k p.a. Am aware that it is index linked and that I cannot draw it until I am aged 60, at which time I will also receive 3 x annual pension as a tax free lump sum.

    My question is regarding the effect of this preserved pension on my lifetime allowance. I am nowhere near having a £1m pension pot from my subsequent employment (if only!) but I understand that I need to multiply the annual pension x 20, and it is this amount that will be taken off my lifetime allowance. Is that 20 x the pension at the point I begin to receive the pension?

    Many thanks!
Page 1
    • Laycity
    • By Laycity 7th Jun 17, 9:30 PM
    • 1,445 Posts
    • 2,178 Thanks
    Laycity
    • #2
    • 7th Jun 17, 9:30 PM
    • #2
    • 7th Jun 17, 9:30 PM
    It'll be 20 x annual + lump sum, so in your case at the 2007 rate it would be £207,000.

    This needs to be adjusted to whatever index linking takes it to at age 60.
    • kidmugsy
    • By kidmugsy 7th Jun 17, 9:31 PM
    • 9,629 Posts
    • 6,384 Thanks
    kidmugsy
    • #3
    • 7th Jun 17, 9:31 PM
    • #3
    • 7th Jun 17, 9:31 PM
    Is that 20 x the pension at the point I begin to receive the pension?
    Originally posted by JBone78
    Yes. And remember to subtract the lump sum too, so that effectively you subtract 23 x annual pension.
    • JBone78
    • By JBone78 7th Jun 17, 9:41 PM
    • 6 Posts
    • 0 Thanks
    JBone78
    • #4
    • 7th Jun 17, 9:41 PM
    • #4
    • 7th Jun 17, 9:41 PM
    Thanks both. But if my £9k a year (2007) has grown to £27k a year when I actually draw the pension (2037) which amount do I multiply x 20?
    • Laycity
    • By Laycity 7th Jun 17, 9:51 PM
    • 1,445 Posts
    • 2,178 Thanks
    Laycity
    • #5
    • 7th Jun 17, 9:51 PM
    • #5
    • 7th Jun 17, 9:51 PM
    Thanks both. But if my £9k a year (2007) has grown to £27k a year when I actually draw the pension (2037) which amount do I multiply x 20?
    Originally posted by JBone78
    It won't grow that much if you have left - where do you get £27k from? It'll be linked to RPI most likely which you can't really predict going forward.
    Last edited by Laycity; 07-06-2017 at 9:55 PM.
    • JBone78
    • By JBone78 7th Jun 17, 10:02 PM
    • 6 Posts
    • 0 Thanks
    JBone78
    • #6
    • 7th Jun 17, 10:02 PM
    • #6
    • 7th Jun 17, 10:02 PM
    Thanks. At 2% annual growth it would be approx £16k per year. So... do I abate the lifetime allowance by 20 x £9k or 20 x £16k ?

    Cheers
    • Laycity
    • By Laycity 7th Jun 17, 10:07 PM
    • 1,445 Posts
    • 2,178 Thanks
    Laycity
    • #7
    • 7th Jun 17, 10:07 PM
    • #7
    • 7th Jun 17, 10:07 PM
    Thanks. At 2% annual growth it would be approx £16k per year. So... do I abate the lifetime allowance by 20 x £9k or 20 x £16k ?

    Cheers
    Originally posted by JBone78
    20 x £16k + £48000 lump sum = £368000
    • JBone78
    • By JBone78 7th Jun 17, 10:11 PM
    • 6 Posts
    • 0 Thanks
    JBone78
    • #8
    • 7th Jun 17, 10:11 PM
    • #8
    • 7th Jun 17, 10:11 PM
    Thanks both!!!
    • johndough
    • By johndough 8th Jun 17, 9:18 AM
    • 651 Posts
    • 250 Thanks
    johndough
    • #9
    • 8th Jun 17, 9:18 AM
    • #9
    • 8th Jun 17, 9:18 AM
    Hi

    The lifetime allowance gets changed every so often, and as said above, inflation adjustments are also unknown.

    So with your DB / PB (Deferred Benefit / Preserved Benefit) compare the starting point - 2007 with this years Annual Benefit Statement to see the growth over 10 years.

    AND with the helpful formulas above do a little experimenting on future growth and then see that you have nothing to worry about, just something to monitor.

    If you don't get the Annual Benefit Statement delivered annually, then make sure the Army Pension People have your current address.

    If they can't, won't or don't do an ABS then ask for a pension statement so that you can calculate your ANNUAL allowance, HMRC say this

    "You need your pension statements to work out how much annual allowance you’ve used in a tax year - ask your pension provider for statements if you don’t get them automatically."

    Which means the Army Pension People are obliged to provide one.

    A good place to start is...

    https://www.gov.uk/guidance/pensions-and-compensation-for-veterans

    Veterans UK Pensions Division
    Mail Point 480
    Kentigern House
    65 Brown Street
    Glasgow, G2 8EX
    Tel: 0800 085 3600

    Unless it has moved / changed recently.
    • Silvertabby
    • By Silvertabby 8th Jun 17, 9:23 AM
    • 1,529 Posts
    • 1,819 Thanks
    Silvertabby
    The Armed Forces pension now increases by CPI, not RPI, and you can use the public sector PI (pension increase) tables to check the increase each year.

    Will be back to post the link.....


    https://www.gov.uk/government/publications/public-service-pensions-increase-2017

    PI 2017 Multiplier Tables
    Annex B

    Scroll down to find the multiplication factor applicable to your date of leaving to update both your lump sum and annual pension.

    These tables are issued every year and reflect the April increases
    Last edited by Silvertabby; 08-06-2017 at 9:30 AM.
    • johndough
    • By johndough 10th Jun 17, 5:18 PM
    • 651 Posts
    • 250 Thanks
    johndough
    Hi

    When you do get a statement, and using the link Silvertabby gave...

    Your 9K will have been re-valued by about a quarter, give or take.

    So now the 20 x Pension etc is 45K more than it was in the 2007 calculation...

    20 x 11,250 = 225,000 + 3 x 11250 is £258,750 very loosely ish.

    25-Jan-07 to 24-Feb-07 1.2770
    25-Feb-07 to 24-Mar-07 1.2732
    25-Mar-07 to 22-Apr-07 1.2694
    23-Apr-07 to 22-May-07 1.2655
    23-May-07 to 22-Jun-07 1.2615
    23-Jun-07 to 22-Jul-07 1.2576
    23-Jul-07 to 22-Aug-07 1.2535
    23-Aug-07 to 22-Sep-07 1.2496
    23-Sep-07 to 22-Oct-07 1.2456
    23-Oct-07 to 22-Nov-07 1.2417
    23-Nov-07 to 22-Dec-07 1.2376
    23-Dec-07 to 22-Jan-08 1.2337
    Last edited by johndough; 10-06-2017 at 5:21 PM. Reason: Formatting foulup
    • JBone78
    • By JBone78 10th Jun 17, 6:07 PM
    • 6 Posts
    • 0 Thanks
    JBone78
    Thanks everybody, I clearly have NOTHING to worry about here!
    • unforeseen
    • By unforeseen 10th Jun 17, 6:35 PM
    • 1,678 Posts
    • 2,118 Thanks
    unforeseen
    Thanks. At 2% annual growth it would be approx £16k per year. So... do I abate the lifetime allowance by 20 x £9k or 20 x £16k ?

    Cheers
    Originally posted by JBone78
    16k? Don't kid yourself. I left in 2005 with an immediate pension of £11k. I now get £14k.

    For the last few years the increase has been 1%.
    • JBone78
    • By JBone78 10th Jun 17, 6:51 PM
    • 6 Posts
    • 0 Thanks
    JBone78
    16k? Don't kid yourself. I left in 2005 with an immediate pension of £11k. I now get £14k.

    For the last few years the increase has been 1%.
    Originally posted by unforeseen
    Yes but I have a preserved pension - not immediate - and won't begin to draw my pension until 2037.
    • Silvertabby
    • By Silvertabby 10th Jun 17, 8:05 PM
    • 1,529 Posts
    • 1,819 Thanks
    Silvertabby
    Yes but I have a preserved pension - not immediate - and won't begin to draw my pension until 2037.
    Your deferred pension will increase each year with CPI inflation so, in theory, it will buy the same amount of goods and services as your £11K pension would buy today.

    Please don't make the mistake of trying to extrapolate the increases to 2037 and then think of that figure in today's spending terms!
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