If, at retirement, my total benefits (Occupational DB & separate AVC fund) do not exceed the SFT of 2 million BUT together do exceed the 2/3 Revenue limit of final salary if all of the AVCs bought an annuity, what happens to my AVC fund?
Could I then use a portion of my fund to bring me to max Revenue limit (via an annuity) and just put the balance in an ARF as long as the SFT is not exceeded? Or is a portion of my AVC fund lost to me and paid to the trustees of my DB occupational pension?
By way of an example, consider a pre-retirement salary of 90k yielding a DB pension of 50k at NRA, together with a DC AVC fund worth 800k. If, say, in the future, annuity rates rise to say 4%, this retiree has a problem (50k+32k > max pension of 90k*2/3), yet the SFT may not have been exceeded since (50k*20)+800k < SFT. This assumes all DB benefits were accrued prior to January 2014. Can this person put 550k into an ARF and buy a 10k annuity to solve this issue? Otherwise it's almost impossible to estimate retirement funds given that annuity rates seem to rise when equity prices rise due to rising bond yields.
Could I then use a portion of my fund to bring me to max Revenue limit (via an annuity) and just put the balance in an ARF as long as the SFT is not exceeded? Or is a portion of my AVC fund lost to me and paid to the trustees of my DB occupational pension?
By way of an example, consider a pre-retirement salary of 90k yielding a DB pension of 50k at NRA, together with a DC AVC fund worth 800k. If, say, in the future, annuity rates rise to say 4%, this retiree has a problem (50k+32k > max pension of 90k*2/3), yet the SFT may not have been exceeded since (50k*20)+800k < SFT. This assumes all DB benefits were accrued prior to January 2014. Can this person put 550k into an ARF and buy a 10k annuity to solve this issue? Otherwise it's almost impossible to estimate retirement funds given that annuity rates seem to rise when equity prices rise due to rising bond yields.