An adjustment to the value of an individual’s
uncrystallised pension rights also triggers a re- calculation of
the lump sum percentage available in multiple schemes.
Lesley has pension and lump sum rights in two schemes for a
sole employment on 5 April 2006. She has total pension rights of
£200,000 and her lump sum rights are £44,000. Her rights
are held in a single
arrangement under each scheme. The £44,000 is
less than her maximum permitted lump sum under HMRC limits but her
maximum permitted pension under HMRC limits is valued at
£160,000.
The position before adjustment was as follows
The reduction in Lesley’s pension rights from
£200,000 to £160,000 must be apportioned between the two
schemes.
In scheme A, the value of the pension rights is adjusted as
follows, £80,000 – (£40,000
x£80,000/£200,000) which gives a figure of £64,000.
In scheme B, the value of the pension rights is adjusted as
follows, £120,000 – (£40,000 x
£120,000/£200,000 which gives a figure of £96,000.
After adjustment, Lesley’s lump sum percentages from
the two schemes become
So after the required adjustment, the rights in Scheme A qualify for protection, as the lump sum percentage exceeds 25% of Lesley’s uncrystallised pension rights in that scheme.
| Glossary ( RPSM20000000) |
