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