If a pension is being paid under income drawdown from a
retirement benefits scheme or a deferred annuity
contract, it is the maximum annual rate that could be drawn, rather
than the amount that actually is drawn, that should be multiplied
by 25 to obtain its value for transitional protection purposes.
Where income is being drawn under drawdown from an
arrangement in a
personal pension scheme it is the maximum income
allowed in the 12 month period in which 5 April 2006 falls.
The value of the crystallised pension rights in these
circumstances is 25 times the maximum annual rate of pension
payable on 5 April 2006.
Example
John is drawing a pension of £5000 from his occupational pension scheme under income drawdown. But the maximum annual rate of his pension is £10,000. The value of the crystallised right is therefore £250,000 (25 x £10,000).
| Glossary ( RPSM20000000) |
