Pension increase exchange offers, where members are offered more money now in exchange for fewer increases in pension payouts later, can be a tricky business. KPMG gives its top five points to consider.
Mike Smedley, pensions partner at KPMG, has put together a list of things to consider if a client receives a letter from their employer offering them an exchange. 1) The differing long-term inflation projections for RPI and CPI - currently about 3% for RPI and 2% for CPI. 2) The possible impact on state benefits 3) The effect on the client's tax position, both income tax and the value of pension benefits tested against the lifetime allowance 4) The chance of living longer than expected 5) The impact on death benefits for dependants. Some offers will result in spouses receivin...
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