Final salary scheme pensions will be worth up to £24,000 a year more than money purchase payouts under the £1.4m savings limit.
The disparity – calculated by Mellon Human Resources & Investor Solutions – relates to the maximum benefit the Inland Revenue will allow DB and DC members to accrue under the proposed lifetime limit.
A DC scheme member retiring aged 55 with a 100% widow’s pension will receive a maximum pension – calculated using the usual factors which determine the open market cost of purchasing an annuity – of £46,000.
But the maximum pension for a DB member, using the proposed 20:1 ratio, is £70,000 a year – £24,000 higher.
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