Defined Benefit Pension and LTA Calculation Clarity?

JamesP8

I have a defined benefit pension, which has a normal retirement date of age 60, a few years away.
A relatively small amount of temporary pension (in addition) would be paid from the age of 60, but only until State Pension age of 67. When it comes to crystallisation and the test against LTA I understand that the pension payable at that point (first year) is multiplied by 20. It seems that the calculation would include a 20x multiple of the temporary pension, although the benefit would only operate for seven years. Is there any allowance made for a temporary pension within the calculation please? Many thanks.

garmeg

JamesP8 said:

I have a defined benefit pension, which has a normal retirement date of age 60, a few years away.
A relatively small amount of temporary pension (in addition) would be paid from the age of 60, but only until State Pension age of 67. When it comes to crystallisation and the test against LTA I understand that the pension payable at that point (first year) is multiplied by 20. It seems that the calculation would include a 20x multiple of the temporary pension, although the benefit would only operate for seven years. Is there any allowance made for a temporary pension within the calculation please? Many thanks.

No, it is counted in the same way. Swings and roundabouts, as the treatment of DB pensions overall is generous for LTA usage.

Albermarle

Yes, even if the extra pension for the first seven years is counted then the 20X rule probably still greatly underestimates the value of a DB pension compared to a DC one.

JamesP8

Many thanks for clarifying this. 

marlot

Yes, I've taken my DB pension at 55, but still get this uplift from 60-67, and I'm expecting it to be an LTA event.
The scheme rules don't allow any variation.