PSI8.2.3 - Lump Sum Benefits and Communication:
Commutation Factors - Capital Value
-
(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
The capital value of the total benefits is the sum which,
with interest accruing, should be sufficient to provide the
pre-commutation pension instalments to be paid. The actuarial
considerations involved in calculating the capital value is
explained in Part 20. There are two uncertain elements in the
calculation at the member's retirement:
- the member's probable life expectancy,
and
- the interest that will be earned on the
scheme's investments.
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