| [Para19 & 23A Schedule 36] |
A member with a protected pension age of less than 50 who takes
a pension or lump sum before they reach the
normal minimum pension age (except where the
scheme from which they are taking benefits is an exempted scheme
see
RPSM03106050) will have their
personal
lifetime allowance reduced for each complete year
that their benefits are taken before the normal minimum pension
age.
The reduction does not apply where a pension is paid before
normal minimum pension age because the member is in ill-health.
The individual’s lifetime allowance will be reduced by
2.5% for each complete year between the date on which the
benefit crystallisation event occurs and the date
on which the individual will reach the normal minimum pension age.
So for an individual with a protected pension age of 35 who takes
benefits on their 35th birthday there are 14 complete years between
their 35th birthday and age 50, and 19 complete years to age 55.
The reduced lifetime allowance alters the individual’s
available lifetime allowance both for the purposes of calculating
whether any
lifetime allowance charge is due and in terms of
the maximum
pension commencement lump sum payable.
Where the individual has a subsequent benefit crystallisation
event and the amount crystallised at the earlier event exceeded the
amount of the individual’s lifetime allowance at that time,
an adjustment must be made to the amount of the individual’s
lifetime allowance used up by the first benefit crystallisation
event.
RPSM03106090 and
RPSM03106100 give examples.
| Glossary ( RPSM20000000) |
