BCEs

Question 1

Valuation basis of BCE

Answer 1

Purchase of a lifetime annuity - market value of fund

Scheme Pension - Scheme pension payable x 20 if commuted then applies to reduced pension but also lump sum

Amount of lump sum

DB at age 75 without having drawn all or part of entitlement to a scheme pension and/or lump sum
Either x 20 or if additional lump sum no commutation = x20 plus lump sum

Drawdown pension test at age 75 - Market value of members drawdown pension at 75 less when first designated under BCE1

Question 2

BCEs during lifetime

Answer 2

SCHEME ADMINISTRATORS responsibility to assess when a BCE occurs to assess the LTA used

Both SCHEME ADMINISTRATOR and MEMBER jointly and severally liable to pay LTA charge

SA will pay and account to HMRC however if the MEMBER does not provide full and accurate info HMRC likely to accept MEMBER solely liable

Question 3

BCEs as a result of DEATH

Answer 3

PERSONAL REPRESENTATIVE are responsible for determining if LTA is payable. This will be done after payment of

Lump Sum Death Benefit
Designation to Drawdown
Purchase of an Annuity

By nominee or dependant receiving payment