PSI25.2.4 - Flexibility in Pension Provision – Annuity Deferral/Income Drawdown –Calculation of Income Drawdown

(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)

Body goes here For drawdown purposes, irrespective of the form of benefits selected for the surplus check described in PSI25.2.3, the pension payable should be calculated by reference to GAD tables using a single life basis only. The tables should be applied to the fund (or remaining fund where benefits are partially secured by annuity purchase) underlying the member's benefits. This should not include any funds to provide a survivor's own right (reversionary) pension. The tables should similarly be applied to the survivor's fund.

The amount of the pension benefit paid (whether under income drawdown, annuity purchase or a combination of the two), together with the pension equivalent of any lump sum already taken, must not when aggregated with benefits from other schemes of the employer exceed the Inland Revenue maximum benefit payable to the member or survivor at any particular point in time.

Subject to this overriding limit, the member/survivor may choose how much pension to draw down within a specified range. The upper and lower points of the range are 100% and 35% respectively of what an annuity might have been using the tables provided by the GAD, although this need not be enforced in the year in which the annuity is purchased, or in which death occurs

If the Inland Revenue maximum benefit is less than 35% of the notional annuity, the member or survivor must be paid the Inland Revenue maximum.