Lump Sum (commutation)

jamespap123

Hi,

Does anyone know if you can determine your maximum cash lumpsum from just your pension at the date of leaving a scheme or your pension to be paid at retirement? Or do you need to know your "Pension Pot"?

What are the necessary calculations to be made?

Thanks

CLAPTON

presumably you are part of a final salary scheme?

jamespap123

Yes thats correct.

dunstonh

your scheme booklet will tell you the calculation.

jamespap123

So do I need to know my pension pot to calculate this? Or can it be done using my pension to be paid NRD?

Cheers

jennifernil

I seem to remember reading that with a final salary pension the "pot" for purposes of calculating the max possible lump sum was taken to be 20 x the pension payable.

This certainly seemed to agree with the sum my husband received when he retired in August 2007.

CLAPTON

final salary schemes don't have a pot

the commutation is determined at the point you take the pension and depends upon the scheme details and your age

jamespap123

I understand that it is 25% max lump sum, yet 25% of what? Hence why I put pension pot. Could it be 25% of the expected present value of your liability to the scheme?

CLAPTON

jamespap123 wrote: »

I understand that it is 25% max lump sum, yet 25% of what? Hence why I put pension pot. Could it be 25% of the expected present value of your liability to the scheme?

as I said, final salary schemes don't have a pension pot: the 25% rule only applies to defined contributions schemes (which do have a pension pot) and not final salary schemes.

jennifernil

http://www.invidion.co.uk/aday_final_salary_tax_free_cash_calculator.php

could be useful

jamespap123

Thanks Guys.