Pension Commencement Lump Sum

Post April 2006, clients may be entitled to Pension Commencement Lump Sum (PCLS) of 25% of their fund value – subject to a maximum fund of their Standard Lifetime allowance.

Protected PCLS

However at A Day (6th April 2006), for certain clients they may have had a PCLS entitlement of more than 25% of their fund, or have Primary or Enhanced protection. They may also be considering Fixed Protection.

The maximum amount of the scheme-specific lump sum payable as a PCLS will be the amount of Tax Free Cash on 5 April 2006 increased by 20% (providing the SLA does not exceed £1.8 million), plus

An additional lump sum which relates to any increase in the value of the individual’s benefits that has occurred from 6 April 2006 onwards.

See PTM063130

Depending upon client’s situation, the Pension Commencement Lump Sum calculator will provide an indication of the client’s projected PCLS entitlement at retirement.

Defined Benefit

The PCLS calculator also has a separate (DB) page that will calculate the maximum PCLS that can be payable under a Defined Benefit scheme.

Once details of the DB pension and Commutation Factor is input, it will show the maximum PCLS and corresponding amount of reduced pension.