Deferred military pension - lifetime allowance

JBone78

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! :beer:

Laycity

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

JBone78 wrote: »

Is that 20 x the pension at the point I begin to receive the pension?

Yes. And remember to subtract the lump sum too, so that effectively you subtract 23 x annual pension.

JBone78

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

JBone78 wrote: »

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?

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.

JBone78

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

JBone78 wrote: »

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

20 x £16k + £48000 lump sum = £368000

JBone78

Thanks both!!!

System

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

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

System

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