Standard lump Sum %

[July 1981]

I’ve recently received my quote which got me thinking, does anyone know the percentage for the standard lump sum, assuming the maximum lump sum offered is 25%.? (Section B NRA 65)

[RobertT]

I think the standard section B lump sum is 3x pension.

If you use the normal 20x multiple to work out the value of the pension, my maths says that equates to 15%.

So you can fund the other 10% with the DBCBS/AVC's, with the remainder being paid as a UFPLS(25% of that also tax free).

[July 1981]

Thanks Robert, excellent as always

[Flashman_]

What is UFPLS. Im in my own struggle with understanding my pension.

[RobertT]

What is UFPLS. Im in my own struggle with understanding my pension.

It stands for Uncrytalised Funds Pension Lump Sum.

In the context of RM pensions, any lump sum over the normal 25% tax free amount is paid out as a UFPLS, which is usually excess cash from the DBCBS or AVC's.

In simple terms, 25% of that excess is also tax free with the remainder being classed as income and taxed according to normal PAYE rules.

There is also a context in terms of personal pensions, where UFPLS is a flexible way to access your cash, with 25% of each withdrawal being tax free:
https://www.hl.co.uk/retirement/ufpls

[Flashman_]

Thanks very much Robert.
Am I right in thinking that if I take my NRA60 and NRA65 benefits only as income(no tax free elements) I would still have to take the full value of the DBCBS which only 25% would be tax free, the rest would go towards the current years income. Or would all of it be tax free if I did not take other lump sums, assuming its value was less than 25% of all the pensions total value.

[RobertT]

Thanks very much Robert.
Am I right in thinking that if I take my NRA60 and NRA65 benefits only as income(no tax free elements) I would still have to take the full value of the DBCBS which only 25% would be tax free, the rest would go towards the current years income. Or would all of it be tax free if I did not take other lump sums, assuming its value was less than 25% of all the pensions total value.

It sounds like you're in section C?

The DBCBS is specifically part of your RMPP benefits, so is taken with the NRA65 pension you accrued from 2012 to 2018.
Although a small amount might sometimes be payable with NRA60.

If you use the usual 20x multiple to work out the value of your RMPP NRA65 and assume that is 75% of pot value, the other 25% can be taken as tax free cash from the DBCBS, with the remainder of that paid as a UFPLS.

For example:

RMPP NRA65 = £3k per year x 20 = £60k
DBCBS = £25k

£60k = 75% so the other 25% can be taken as tax free cash from the DBCBS. In this example that's £20k with the remaining £5k paid as a UFPLS.

*Anyone with AVC's can use the same method to work out how much of that money can be taken as tax free cash with NRA60 benefits.

[Duran]

Thanks very much Robert.
Am I right in thinking that if I take my NRA60 and NRA65 benefits only as income(no tax free elements) I would still have to take the full value of the DBCBS which only 25% would be tax free, the rest would go towards the current years income. Or would all of it be tax free if I did not take other lump sums, assuming its value was less than 25% of all the pensions total value.

No. Only a small amount of your cash balance can be used for NRA60. Depending on your total cash balance. It will tell you on your second round of figures how much you can use for NRA60.

[Flashman_]

Thanks guys.