Resettlement commutation refers to the option for AFPS75 members entitled to retire from active service with an immediate pension (IP) to commute part of their pension benefit for a lump sum cash payment. The pension benefit after age 55 is unaffected and the resettlement commutation payment is provided instead of an amount of pension otherwise payable from the IP point to age 55.
The factors required are unisex factors.
The pension reduction to apply in respect of resettlement commutation, for a member who was not age 54 last birthday, should be determined as follows:
Pension reduction (p.a.) = (RCLS / £1,000) x Fac
Where:
RCLS = the resettlement commutation lump sum chosen by the member
Fac = Annual reduction in retired pay/pension factor from Table 801 (column 3)
The pension in payment after commutation remains level until age 55. At age 55, the member's pension is restored to the pre-commutation amount and the member's pension becomes subject to pension increases as normal.
Where a member is age 54 last birthday, an adjustment for the recovery period is required. The pension reduction to apply in respect of resettlement commutation in this case should be determined as follows:
Pension reduction for a member age 54 last birthday (p.a.) = (RCLS / £1,000) x Fac / (55 - Age)
Where:
RCLS = the resettlement commutation lump sum chosen by the member
Fac = Annual reduction in retired pay/pension factor from Table 801 (column 3)
Age = member's actual age
Resettlement commutation does not affect the pension paid to a surviving spouse or civil partner. However, under the AFPS75 Regulations, the lump paid on death of a pensioner can be affected by resettlement commutation.
