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Is this lump sum calculation correct

04 Feb 2020, 19:41

So this is in relation to my NRA 60 Pension and lump sum. I received the initial lump sum payment 3 months ago and received these revised one today.

My reason for writing is that I thought my lump sum was my NRA 60 pension + AVC amount divided by 4 would give you your 25% tax free lump sum.

However their calculation is simply your pension x 20 divided by 3. Is that correct.

Here are the figures i have received today.

From the information sent to me from Capita I can see that the revised benefits payable from RMSPS will remain the same with a pension of £6415.49 and a tax free lump sum of £42769.93. The tax free lump sum paid to you was funded from your AVC account and is the maximum that can be paid at this time based upon your pension of £6415.49 (20 x £6415.49 / 3 = £42769.93) under the HMRC

Are there figures correct ?

Many thanks

Is this lump sum calculation correct

05 Feb 2020, 01:37

If you have avcs total 1/3rd of your annual pension times by the multiplier then it would be correct.
For example
Annual pension. £6000
Avcs. £40000
Its just be a quirk of the maths.
RobertT would be the man to ask.

Is this lump sum calculation correct

05 Feb 2020, 06:33

Renrag40's answer is correct!

Your maths to work it out would be:

pension x 20 + AVC's / 4 = 25% tax free lump sum; or in money terms
6,415 x 20 + 42,769 / 4 = 42,769

If I remember correctly you've taken your NRA60 and you have AVC's of more than 25%? Therefore the £42,769 is the maximum tax free amount you can take with your NRA60.

It's not so much a quirk of the maths, it's because you have AVC's worth more than 25%.
So in practice they've worked out your NRA60 as £128,300(6415x20) which equates to 75% of your total NRA60 pot and then added on the other 25% or £42,769 to make it up to 100%.

You will still have some AVC's to fund your tax free cash with your NRA65, aswell as the DBCBS.
But anything over 25% of those benefits has be taken as a taxable lump sum.

Is this lump sum calculation correct

05 Feb 2020, 21:33

Thank Robert.

As alway....


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