The factors somewhat surprisingly, are not that different at most ages from those previously in place, given that they are meant to reflect underlying market annuity rates. Indeed, now that capped income will be available throughout a client’s lifetime, the new tables provide age related factors up to age 85 which will benefit those clients, previously in Alternatively Secured Pensions, where income was based on an age 75 income factor regardless of age.

The biggest difference between the old and new regime has focused on the fact that the base income does not enjoy the 20% uplift included in the old calculations.

That is true in respect of clients who:

• crystallise benefits for the first time, or
• start a new reference period for their existing capped income arrangement after 5 April 2011
• request and accept a member driven annual review
• partially annuitise their existing capped income, or implement a pension debit from a pension sharing order when the new limits will apply from the beginning of the next scheme income year
• transfer an existing capped income arrangement when the new limits will start from the beginning of the next scheme income year following the transfer.

However, where clients are in an existing five year reference period and use additional designation to top-up existing post A-Day capped income, the new maximum income applying for the remainder of the existing reference period will enjoy a 20% uplift using the new income factors.