PENSION INCREASE EXCHANGE Flashcards
1
Q
What is a Pension Increase Exchange
A
Where member is offered option of giving up non statutory increases in return for a higher initial pension
2
Q
Benefits and Drawbacks of Pension Increase Exchange
A
BENEFITS
Member May prefer higher initial income to enjoy whilst active/ healthy
Member May be entitled to higher PCLS
Member in poor health may not live long enough to see benefits of an escalating pension
DRAWBACKS
A member who lives longer than average will be worse off
Value of members benefits will be higher for testing against LTA 20:1 factor
The calculation of pension income for final year May exceed Annual Allowance
