(b) Maris:
– Is resident and domiciled in the UK and is widowed.
– Has three married children and five grandchildren under the age of 12.
– Attained the age of 68 on 30 January 2015 and decided to vest her pension benefits on that date.
– Wishes to make regular gifts to her family in order to reduce inheritance tax on her death.

Personal pension fund:
– Maris had a money purchase pension scheme which was valued at £1,550,000 on 30 January 2015.
– Maris took the maximum amount possible as a lump sum on that date.
– Maris does not understand why the amount she received was £447,500.

Assets and income:
– In addition to pension income and savings income totalling around £60,000, Maris receives dividends from shareholdings in quoted companies of around £45,000 each year.
– The shareholdings in quoted companies are currently valued at £980,000.
– Maris wishes to gift some of the shares or the dividend income to her children and grandchildren on their birthdays each year.
– Maris already makes gifts each year to use her annual exemption for inheritance tax purposes.

Required:
(i) Explain how the cash of £447,500 received by Maris as a lump sum from her pension scheme was calculated. (4 marks)