RPSM09103060 - Technical Pages: Member benefits: An alternatively secured pension: Review of limits
This guidance only covers members who became entitled to an alternatively secured pension before 6 April 2011. If the member reached age 75 between 22 June 2010 and 5 April 2011 you should also read the guidance in RPSM17100000 onwards.
If the member reached age 75 on or after 6 April 2011 then see the guidance at RPSM09103500.
Review of alternatively secured pension limits
Annual limit
| [Para 12 and 13, Sch 28] |
The minimum and maximum level of alternatively secured pension must be recalculated every year at the beginning of each pension year, based on the level of alternatively secured pension fund held in the arrangement at that point.
Example
Alan draws an alternatively secured pension from his 75th birthday on 9 May 2007. His pension years therefore run from
The scheme administrator makes the initial calculation on 9 May 2007, which applies for the first pension year.
A recalculation must be done on 9 May 2008, 9 May 2009 etc. These revised limits will apply for each following pension year.
Relevant annuity calculation always based on same age
[Reg 3(1)(6) of the Registered Pension Schemes (Relevant Annuities) Regulations 2006 (SI 2006/129)]
The scheme administrator must calculate the minimum and maximum level of alternatively secured pension at the beginning of each pension year by reference to the GAD tables assuming that the member is still aged 75 and not use their actual current age.
This helps to ensure that the alternatively secured pension fund will provide a pension income for the life of the member, as it depresses the level of the basis amount (the amount of lifetime annuity a given sum would purchase will in theory be higher the older you get).
So in the above example, where the scheme administrator makes a recalculation of limits on 9 May 2008, 9 May 2009 etc. they will always do so assuming that Alan is still aged 75.
| Glossary (RPSM20000000) |
