Section 32 GMP and the LTA
Nath
Member
Morning All & Happy New Year!
An existing client is just about to take the GMP from his pension at 65. There is no impact on his LTA at all due to values but just for my own sanity.......
GMP is £7,446
Fund value is circa £65K
Value to provide GMP is circa £131K
Which one is used to calculate the LTA used?
Thanks
Nathan
Comments
I'm talking to myself now but my guess is the £131K as that's the cost to provide it.
I dont know Nathan, Im thinking that it will be the pension income x 20, rather than the fund value or the fund value needed to provide the GMP, that will be used for LTA purposes. That is that Ive read it correctly and the client is starting to draw the GMP element of his scheme pension ?
Yes going to draw GMP from the Section 32. Yeah perhaps the x 20 GMP, as if it was still in the DB scheme. Just thought I would check though but can't find anything online. It won't impact him at all but just for my own info really.
Hi
You have said s32 here.
My understanding is where the fund value supports the GMP you have a lifetime annuity essentially so use fund value. If it does not, as in your case it is effectively scheme pension so multiply by 20.
On that basis and that Clerical Medical will surely be buying the annnuity to pay the GMP, it would be the £131K I suppose.
No, the 65k fund value doesn't support the GMP so it'll be GMP x 20. They will need to use the 131k to buy a scheme pension.
Ah yes I see. Thanks for clarifying Les. Thanks Maddy too
Luckily nowhere near LTA issues but just wanted this one clarified for my own piece of mind.
Have a good weekend all!