How is the Growth Calculated?
The following example shows how the ‘growth’ in each part of the pension is then used to calculate that element of the Annual Allowance.
|Pension Section||Accrued Service at Start||Pensionable Salary At Start||Pension at Start||TPV||CPI||Re-valued TPV||Accrued Service At End||Pensionable Salary At End||Pension at End||End TPV||Pension Input Amount|
|1995||20y 60d||£30,764||£7,753||£147,307||2.7%||£151,284||21y 60d||£32,086||£8,486||£161,248||£9,964|
|2008||20y 60d||£30,764||£10,337||£165,392||2.7%||£169,858||21y 60d||£32,086||£11,316||£181,056||£11,198|
TPV = Total Pension value. This figure is calculated at the start. Then inflation is added to give a re-valued TPV, which is then compared to the End TPV to calculate the Pension Input Amount
CPI = Consumer Price Index; the measure used to show the rate of inflation
We understand that this is a complex calculation and we have tried to make our example as straight forward as possible.
The important point to note is that IF you have received an Annual Allowance Statement saying you have breached this, contact us, or book yourself onto a Surgery and we will be able to explain your situation in full.