I'm looking to see what the maximum tax free lump sum is on early retirement for an employee in Public sector - teacher. From research it seems to be max of (i) and (ii):
(i) 3/80ths x actual service at early retirement x final remuneration
(ii) N/NS x LS x final remuneration, where
N=actual service
NS=potential service to normal retirement age, had service continued until then
LS=maximum lump sum receivable had employee stayed until normal retirement age
Putting this into numbers:
(N) Actual service at early retirement = 20
(NS) Potential service to NRA=25
Salary=55k
(LS) Max lump sum at NRA = 1.5 times salary (as they have 20 years service) = 55k x 1.5 = 82.5k
Revenue max tax free lump sum = (20/25)*82.5=66k.
Q1: Are those figures correct?
The actual lump sum they are due to get is around 37k, as it based on 3/80ths x actual service and then reduced for early retirement.
Q2: Does that mean they can add in 28k from their AVC on a tax free basis?
Q3: When they actually come to early retire and take their AVC etc. who confirms all of the above?
Thanks for any help/suggestions.
(i) 3/80ths x actual service at early retirement x final remuneration
(ii) N/NS x LS x final remuneration, where
N=actual service
NS=potential service to normal retirement age, had service continued until then
LS=maximum lump sum receivable had employee stayed until normal retirement age
Putting this into numbers:
(N) Actual service at early retirement = 20
(NS) Potential service to NRA=25
Salary=55k
(LS) Max lump sum at NRA = 1.5 times salary (as they have 20 years service) = 55k x 1.5 = 82.5k
Revenue max tax free lump sum = (20/25)*82.5=66k.
Q1: Are those figures correct?
The actual lump sum they are due to get is around 37k, as it based on 3/80ths x actual service and then reduced for early retirement.
Q2: Does that mean they can add in 28k from their AVC on a tax free basis?
Q3: When they actually come to early retire and take their AVC etc. who confirms all of the above?
Thanks for any help/suggestions.