For the purposes of protection, the value of a member’s
lump sum rights which have already been paid is assumed to be 25%
of the value, on 5 April 2006, of their crystallised pension rights
from relevant existing pensions.
RPSM03301005 explains what relevant
existing pensions are, and
RPSM03301010 to
RPSM03301020 explain how they should
be valued.
In the interests of simplicity, the valuation method is the
same, regardless of type of scheme.
Note that this value is not the same amount as the actual
lump sum taken when the crystallised pension rights originally came
into payment.
Example
Andy has a pension in payment on 5 April 2006 of £5000. This has a capital value of 25 times the annual rate of the pension in payment (£125,000). So the deemed value of the lump sum is 25% of £125,00 which is £31,250.
The value of crystallised lump sum rights is only relevant when testing whether or not an individual’s total lump sum rights on 5 April 2006 exceeded £375,000.
| Glossary ( RPSM20000000) |
