Sorcha has reached her normal retirement age (NRA) in her employer's DC pension scheme. Her accumulated fund is €80,000. Her best final remuneration is €60,000 per annum, she has no retained benefits, and she has 28 completed years' service. Assuming she opts for the traditional benefit option, what is the MAXIMUM lump sum she can take from the scheme at NRA?

• A. €20,000
• B. €60,000
• C. €62,000
• D. €80,000

Answer: (D)

In a traditional benefit option within a defined benefit framework, the lump sum you can take is linked to your pension entitlement, typically set at three times the annual pension you would receive, but it cannot exceed the value of the accrued fund at retirement.

Compute the annual pension first: final remuneration × years of service ÷ accrual denominator. Here that is 60,000 × 28 ÷ 60 = 28,000 per year.

The usual lump sum implicit in the traditional option would be 3 × 28,000 = 84,000. However, the actual lump sum cannot exceed the scheme’s accumulated fund, which is 80,000.

Therefore, the maximum lump sum you can take at NRA is 80,000 euros.