Inverse commutation refers to the option for AFPS05 and RFPS members to give up all or part of their retirement lump sum in exchange for additional pension. Actuarial factors are needed to determine the additional pension payable.
The additional pension payable by inverse commutation should be calculated as follows:
Additional pension (p.a.) = (LS / £100) x Fac
Where
LS = the amount of lump sum the member wishes to exchange for additional pension
Fac = factor from Table 701, selected depending on if the member is exchanging for additional member's pension only, or additional member's and spouse's pension.
The factors are unisex factors. For inverse commutation at retirement, the factors for age 55 and above should be used. The factors represent the annual amount of additional pension in exchange for giving up a lump sum of £100.
