Finance Act 2004

Valid from 06/04/2006

11 (1) This paragraph applies for the purposes of benefit crystallisation event 3 if the individual became entitled to the pension on or after 6th April 2006. U.K.

(2) The permitted margin is the amount by which the annual amount of the pension at the rate at which it was payable on the day on which the individual became entitled to it would be greater if it had been increased by whichever of calculation A and calculation B gives the greater amount.

(3) Calculation A involves increasing that annual amount at the relevant annual percentage rate for the whole of the period—

(a) beginning with the month in which the individual became entitled to the pension, and

(b) ending with the month in which the individual becomes entitled to payment of the pension at the increased rate.

(4) The relevant annual percentage rate is—

(a) in a case where the pension is paid under a pension scheme, or an arrangement under a pension scheme, in relation to which the relevant valuation factor is a number greater than 20, the annual rate agreed by the Inland Revenue and the scheme administrator, and

(b) otherwise, 5% per annum.

(5) Calculation B involves increasing that annual amount by the relevant indexation percentage.

(6) If the retail prices index for the month in which the individual becomes entitled to payment of the pension at the increased rate is higher than it was for the month in which the individual became entitled to the pension, the relevant indexation percentage is the percentage increase in the retail prices index.

(7) If it is not, the relevant indexation percentage is 0%.