# Lump sum value to use in SCSB redundancy calculation



## RichieRuin (9 Jan 2009)

Hello

This is my first post so please excuse me if I have unwittingly broken any of the posting rules.

It looks like I will soon be made redundant after 22 years service. My gross package including statutory redundancy will come to around €160k. I have researched the various taxation options and it looks like Standard Capital Superannuation Benefit (SCSB) is the most tax-efficient for me but I cannot work out the exact figure. The formula is

```
A x B
-----  - C
  15
 
where:
 
A = average annual income for the last three years
B = years of service
C = any lump sum pension entitlements
```
 
I know A and B but I haven't a clue what to use for C. I have been told it is the present value of the tax-free lump sum I could expect to receive on retirement at age 65 as part of my defined benefit pension. This is an actuarial value that has to be obtained from our pension advisers but apparently they are very reluctant to give a figure until the redundancy is confirmed. I was wondering if anyone could provide me with a rough rule of thumb that would enable me to estimate what the SCSB would be. According to my latest pension statement the value of my tax-free lump sum at retirement would be €133k. I am 44 now so would it be far off the mark to estimate the present value to be around €66k?

Also I have been told that there is an option to waive the right to a tax-free lump sum on retirement as a way to reduce the amount of tax payable on a redundancy package. Is this true, and if so what is the effect on the pension at retirement and is it an option that one would normally be advised to consider?


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## Don_08 (9 Jan 2009)

As i'm feeling generous, multiply your final salary  ( thats total taxable earnings ) by 30%.  That will give you a rough idea of your PVTFLS.  Only applicable for the dates and age etc you have given.


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## RichieRuin (9 Jan 2009)

Many thanks Don_08, your generosity is much appreciated.


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## dealgan (16 Jan 2009)

Also, remember that the statutory portion of your redundancy is NOT taxable i.e. SCSB is only applied to the discretionary portion of your gross package (works out better for you of course).


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