This petition was submitted during the 2019-2024 parliament
Petition Make the valuation of DC pensions equivalent to DB pensions
The Government should change how DB pensions are measured against the Lifetime Allowance (LTA) to be the first year's pension multiplied by a market rate factor comparable to annuity rates available to DC pension pots. This would make the annual pension valuation of DC and DB pensions equitable.
More details
The LTA is the limit on how much someone can build up in pension benefits over their lifetime whilst enjoying tax benefits. The measurement of DB pension scheme values should be linked to a measurement equivalent to the pension that DC pension pots can buy on the open market.
The LTA limit is £1,073,100. The valuation of a Defined Benefit (DB) and Defined Contribution (DC) pension differs. The DC benefit is the monetary value of someone's pension pots, which can be directly measured against the LTA. The DB value is currently set at 20x the annual pension. To illustrate, a £50k DB pension would be valued at £1m (under the LTA). At current rates, a £1m DC pot would only buy a £30k equivalent pension, meaning DB pensions should have a valuation of about 33x, not 20x, to be comparable.
This petition is closed This petition ran for 6 months