Jenny is a member of three schemes in respect of two different
employments. On 5 April 2006 her benefit rights were as follows.
Scheme 1 – pension rights = £25,000; lump sum =
£15,000 (60%)
Scheme 2 – pension rights = £80,000; lump sum =
£25,000 (31.25%)
Scheme 3 – pension rights = £100,000; lump sum =
£27,000 (27%)
Schemes 1 and 2 both relate to employer Z. Scheme 3 relates
to employer C. All the pensions provided are within the HMRC
maximum permitted pension. However the maximum permitted lump sum
for employer Z is £30,000 and for employer C £25,000.
The lump sum rights of £40,000 in respect of employer Z
must be reduced and apportioned as follows
Scheme 1: £15,000 – (£10,000 x £15,000/£40,000) = £11,250
Scheme 2: £25,000 – (£10,000 x £25,000/£40,000) = £18,750
The lump sum right in respect of employer C is the lower HMRC
maximum permitted lump sum value of £25,000.
This means Jenny's adjusted entitlements on 5 April 2006 are
Scheme 1 – pension rights = £25,000; lump sum =
£11,250 (45%)
Scheme 2 – pension rights = £80,000; lump sum =
£18,750 (23.44%)
Scheme 3 – pension rights = £100,000; lump sum =
£25,000 (25%)
Only scheme 1 has lump sum rights of more than 25%, so this
is the only scheme that can be protected. Schemes 2 and 3 will pay
out lump sums in accordance with the normal lump sum rules in
Schedule 29.
| Glossary ( RPSM20000000) |
