RPSM11104970 - Technical Pages: Lifetime allowance: Valuing benefits on BCEs: Pension in payment on 6 April 2006: Increase of a scheme pension in payment

Augmentation of a pre-commencement pension being paid as a scheme pension

Where a scheme pension in payment is increased beyond a permitted margin the excess increase crystallises for lifetime allowance purposes through BCE 3 (see RPSM11104310).

This also applies to a pre-commencement pension that is being paid as a scheme pension beyond 6 April 2006. (Although, as explained on RPSM11104400, the permitted margin for pre-commencement pensions allows for increases that follow more generous pre-6 April 2006 scheme rules).

If the trigger of BCE 3 is the first BCE in relation to the member this in turn triggers the crystallisation of any existing pre-commencement pensions for lifetime allowance purposes. This includes the scheme pension being augmented that triggered the BCE 3.

So the excess increase is valued through BCE 3 but then the crystallised, capital value of the scheme pension itself, valued on the basis of its value before the triggering augmentation, reduces the level of available lifetime allowance at that BCE.

Any other pre-commencement pension in payment to that member is similarly considered.

RPSM11104980 gives an example.