After an amount has been crystallised by a
BCE the amount of the member’s
lifetime allowance used up will be the appropriate
percentage represented by the amount of the benefits that had been
taken.
If possible, before benefits are due to be taken, the
scheme administrator will want to contact the
member informing them of the amount of benefits to
be taken and ask the member to advise the level of lifetime
allowance previously used at the date of the BCE and say whether
any other benefits are due to come into payment at or around the
same time. It should also be established at this point if the
member is entitled to an enhanced lifetime allowance.
If the member opts to take benefits at a point in time other
than their expected retirement date, they must inform the scheme
administrator depending on the scheme provisions of the amount that
they want to take. The scheme administrator may then want to advise
the member of the percentage of the
standard lifetime allowance that this represents.
If benefits are being taken from more than one scheme the
scheme administrator should find out what order the member wishes
them to be considered in for the purposes of the lifetime
allowance. This choice will only apply to BCEs happening on the
same day.
To help individuals keep track of the amount of their
available lifetime allowance the scheme administrator is required
to give the member a statement showing the percentage of the
standard lifetime allowance that has been used up under that
scheme. This can be done within three months after each
BCE and annually in the case of a pension payment
from the scheme.
In order to find out the percentage of the standard lifetime
allowance used at any particular BCE the scheme administrator needs
to establish the amount being crystallised through the BCE. Where a
lump sum is being paid the amount crystallised is the amount of the
lump sum but where a pension is being paid the amount crystallised
would be the amount of fund used to provide this or, in the case of
a scheme pension the starting amount of pension (expressed as an
annual rate) multiplied by 20 or such higher multiple as agreed
with HMRC. The scheme administrator will convert the benefits to be
paid into a percentage of the standard lifetime allowance and will
have checked whether the amount of benefits being used exceeds the
member’s lifetime allowance.
| Glossary ( RPSM20000000) |
