Brand Bitesize: Defined Benefit Commutation Factor
In this Brand Bitesize video, we take a look at how to work out the maximum amount of Pension Commencement Lump Sum (PCLS) available at normal pension age under a Defined Benefit (DB) scheme. This is potentially relevant to all CII pension exams, including R04, J05, and AF7.
This article is relevant to examinable tax year 2022/23 and is correct as at 6 December 2022.
Defined Benefit Commutation Factor
There are two ways in which a member of a DB scheme can receive a PCLS at normal pension age, but in this video, we look at a member giving up some of their pension for a PCLS (known as commutation). Using the commutation factor, we can calculate the maximum amount of PCLS that can be taken, and how that would subsequently impact the pension they will receive (and by how much). Watch this 2-minute bitesize video to see how the calculation works in practice.Check out this short, informative video - it's Brand Bitesize, and this one's all about Defined Benefit Commutation Factor - useful for #CII AF7, R04, or #J05 exam revision. Click To Tweet
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