RPSM11104430 - Technical Pages: Lifetime allowance: Valuing benefits on BCEs: Augmenting a scheme pension – BCE 3: Prevention of overlap under BCE 3 when calculating XP: Further BCE 3 occurs before 10th October 2007

Prevention of overlap under BCE 3 when calculating XP – further BCE 3 occurs before 10th October 2007

Once an increase in a scheme pension in payment has triggered a lifetime allowance test through BCE 3 the level of excess pension (XP) that crystallised at that point will be excluded from the calculation of XP at any future event, where that same pension is potentially increased once again beyond the permitted margin at that time.

Where BCE 3 is triggered more than once the notional XP at the latest point is reduced by the XP, or the total of the XP amounts, that crystallised at those earlier events.

How the XP, or the total of the XPs, that crystallised at those earlier events reduces an XP at the later event depends on whether the future BCE 3 occurred on or after 10th October 2007 or before that date.

The following example shows how the amount crystallised at the earlier XP, or the total of the XPs, reduces the XP in respect of a further BCE 3 occurring before 10th October 2007.

Example – where further BCE 3 occurs before 10th October 2007