No Access to 25% Lump Sum

lisboa84

Marcon wrote: »

The rules of the scheme may or may not permit your dad to give up ('commute') some of his pension for a further tax free lump sum.

GunJack wrote: »

The only way to increase the lump sum is by giving up some of the annual pension at a commutation rate of 12:1, i.e. every £1 of annual pension gves £12 of extra lump sum up to a max lump sum - ask MyCSP for your options.

Thanks guys.

I don't remember reading anything about commutation in his pension booklet, but I'll be sure to keep a note of that on his record. He hasn't retired yet so there's time to make decisions yet.

By the way his rough figures as of today are -

400k in his DB pension fund,
35 years of service,
Salary 30k.

So with the lump sum formula used in his pension booklet, it's less than 10%.
Which he may be happy with anyway, but I'll be sure to relay the commute option for him to explore.

Oh, apologies for hijacking someone else's thread!

Silvertabby

lisboa84 wrote: »

Thanks guys.

I don't remember reading anything about commutation in his pension booklet, but I'll be sure to keep a note of that on his record. He hasn't retired yet so there's time to make decisions yet.

By the way his rough figures as of today are -

400k in his DB pension fund,
35 years of service,
Salary 30k.

So with the lump sum formula used in his pension booklet, it's less than 10%.
Which he may be happy with anyway, but I'll be sure to relay the commute option for him to explore.

Oh, apologies for hijacking someone else's thread!

Where did you get the £400K from? With a DB scheme, there isn't a pot value - unless you have asked for a CETV (transfer valuation).

At a very basic level, 35 years service with a final salary of £30K and an accrual rate of 1/80th =

£30K / 80 x 35 =

£13,125.00 annual pension
£39,375.00 tax free lump sum
(assuming no early retirement reductions)

... with the possible option of giving up some of the annual pension in return for a larger tax free lump sum (subject to commutation rate and scheme rules).

lisboa84

Silvertabby wrote: »

Where did you get the £400K from?

The 400k is the figure written on his latest statement which gets updated every 3 months - I guess it's really just the transfer value. (I assume this also includes his COPE amount which is recorded on the government gateway website.)

Silvertabby wrote: »

... with the possible option of giving up some of the annual pension in return for a larger tax free lump sum (subject to commutation rate and scheme rules).

I mentioned this to my father and he seems to think some retirees have left the company in the last few years with a higher tax-free sum, upon request, so I Imagine the company have opened up that possibility to reduce the risk of a lot of people transferring out to a different scheme.

swindiff

Its more than likely a LTA (Lifetime Allowance figure) rather than a CETV. You normally need to request a CETV.

sheslookinhot

People drawing CETV from our scheme have highlighted that there is a significant difference in the TFLS available from the CETV, than if they had been drawing their DB pension. 25% from the TFLS equates to around 18% of the TFLS available if taking it with the reduced DB pension.

lisboa84

swindiff wrote: »

Its more than likely a LTA (Lifetime Allowance figure) rather than a CETV. You normally need to request a CETV.

I'll check the statement again later, but I thought LTA is set by HMRC as £1.03million?

swindiff

Yes it is. That figure is possibly showing you how much of the LTA you have accrued?