Pension commencement lump sum (PCLS) meaning

THIS PRACTICE NOTE APPLIES TO MONEY PURCHASE ARRANGEMENTS FROM 6 APRIL 2015 From 6 April 2015, new pension flexibilities expanded the retirement choices for DC members and others with ‘flexible benefits’ (in essence, money purchase and/or cash balance entitlements). As part of those reforms, drawdown became more broadly accessible. For background on the changes implemented on 6 April 2015, see Practice Note: Pension freedoms—an introduction [Archived]. This Practice Note concentrates on the legal framework for drawdown arrangements set up on and after 6 April 2015. It also addresses how pre-April 2015 drawdown is treated from that date. For the rules governing drawdown before 6 April 2015, see Practice Note: Drawdown between 6 April 2011 and 5 April 2015 [Archived]. What is drawdown? The label ‘drawdown pension’ (often called ‘flexible income’) replaced ‘unsecured pension’ and ‘alternatively secured pension’ used up to 5 April 2011. Drawdown pension describes the method of paying benefits that allows members to set their own yearly income from a pension arrangement...

FORTHCOMING DEVELOPMENT 1 : Under section 10 of the Finance Act 2022, the normal minimum pension age (NMPA) is scheduled to increase from 55 to 57 on 6 April 2028 (excluding members of the public service pension schemes for the firefighters, the police and the armed forces). The Act will also confer on members of registered pension schemes an explicit right to take benefits before age 57 where, on or before 4 November 2021, they either held an ‘unqualified right’ to take benefits, or were already in the process of a substantive transfer to a scheme offering an unqualified right to a protected pension age below 57 on or before 4 November 2021. To rely on this new 2028 protection, the relevant scheme’s rules must have included (on 11 February 2021) an unqualified right to take entitlement to scheme benefits before age 57. For further information, see Practice Note: Increasing the normal minimum pension age (NMPA) to 57—pensions impact. FORTHCOMING DEVELOPMENT 2 : On 22 November 2023,...

A-day 'A-day' is the widely used term for the broad pension tax 'simplification' reforms that began on 6 April 2006. The changes covered: how much pension contribution was allowed, the kinds of schemes an individual could invest in, the sums that could be taken (and when), and the choices available for any remaining fund. A-day also introduced the annual allowance and the (now abolished) lifetime allowance. See: Annual allowance and Lifetime allowance. AFPS AFPS: Armed forces pension scheme; see Practice Note: Public sector pensions and family proceedings. Accrual rate The speed at which pension benefits build as pensionable service is completed in a final salary scheme, eg 1/60 for each year of pensionable service. Accrued benefits The benefits earned in respect of service up to a specified date. Added years Extra pension provided by adding further years of pensionable service in a salary-related scheme. Such additional years are secured via transfer payments or through additional voluntary contributions/augmentation...