SCSB Calculation - Value of "C"

[Gus99]

Hi - hope you can help me.

In the SCSB calculation for tax relief on a lump-sum redundancy, I understand C refers to the present value of a future pension tax-free lump sum.

Looking at my pension statement, the valuation is currently 165k, and it says that the total projected value (if I left service today and all contributions ceased) would be €483k, which in todays money would be €264k using a 3% discount rate.

So if I take 25% of €264k would that be an approximation for C? I am aged 39. I am only looking for an approx. figure, as I am hoping that redundancy is not imminent!

Thanks in advance

 

[ClearFinance]

Hi Gus 99

This is usually calculated by the actuarial department in a likfe office. the 264 is a projected value, not the same thing. C refers to what you would take tax free at retirement in todays money, example your tax free cash today is worth 100000 so if you took 25% that is 25k. Its not your projected value it is only the tax free cash portion.

 

[pierboy]

I think the value actually should be 25% of 165K - theres no reason why they should put a higher value on it that this. However there is also the possibility thay you could have a higher TFLS using the alternative service/salary formula - which is 3/80ths of your final remuneration for each year of service up to date of redundancy. The current calculation of this could be 100,000 for example - however this is commonly discounted further on the grounds that it will only grow with inflation up to Normal Retirement Age.