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Members already in receipt of benefits do not usually have an entitlement to a cash equivalent transfer value. The pensioner cash equivalent value should be calculated using the method and factors in this note, but used for divorce purposes only.

There are two sets of tables, both found in the Consolidated Factor Workbook:

Table 301 : Pensioners who did not retire on ill health grounds
Table 302 : Pensioners who retired on ill health grounds

The main difference between Table 301 and Table 302 is the difference in pension increases below age 55.

AFPS05 Members who retired on Tier 1 ill health benefits should be treated as standard deferred members as they are not provided with immediate pension benefits. The section Active Members and Deferred Pensioners therefore applies to these members.

AFPS05 members in receipt of Early Departure Payments (EDP) are treated as deferred members as EDPs are not considered to be pension benefits. The section entitled Active Members and Deferred Pensioners therefore applies to these members.

Calculation

The pensioner cash equivalent should be calculated as follows:

CE = (MP x F_p) + (PI x F_i) + (SUR x F_sur) - (PRE GMP + 0.15 x POST GMP) x F_gmp

Where:

MP = current member's pension, see Pension Benefits later in this section

PI = accrued pension increases below age 55 (normal health retirement only)

SUR = pension payable on the death of the member to their spouse or partner, see Pension Benefits later in this section

PRE GMP = annual GMP accrued before 6/4/1988, including revaluation; see Guaranteed Minimum Pension for members who reach SPA before 6 April 2016 and Guaranteed Minimum Pension for members who reach SPA on or after 6 April 2016 later in this section

POST GMP = annual GMP accrued after 6/4/1988, including revaluation; see Guaranteed Minimum Pension for members who reach SPA before 6 April 2016 and Guaranteed Minimum Pension for members who reach SPA on or after 6 April 2016 later in this section

F_p = factor for member's pension - Table 301 or 302, in the Consolidated Factor Workbook

F_{i =}factor for accrued pension increases below age 55 - Table 301 in the Consolidated Factor Workbook

F_sur = factor for survivor's pension - Table 301 or 302 in the Consolidated Factor Workbook

F_gmp = factor for GMP saving - Table 301 or 302 in the Consolidated Factor Workbook (factor should be selected taking into account the date at which the member reaches State Pension age - see the section entitled Adjustments for Guaranteed Minimum Pension)

The appropriate factors should be taken from the tables in force at the valuation day for calculations being completed after a pension sharing order has been made, or the tables in force at the calculation date for other cases. In all circumstances, the factors should be selected by reference to the member's age as at the calculation date.

Pension benefits

If the member's pension is reduced due to abatement or suspension due to reemployment, then the abatement reduction should be ignored for the purpose of this calculation. Benefits should be calculated as though the member had ceased reemployment and valued accordingly.

Guaranteed Minimum Pension for members who reach SPA before 6 April 2016

The cash equivalent value must be adjusted to reflect the increases on the Guaranteed Minimum Pension (GMP) that are the responsibility of the State after State Pension age. For members who reach SPA before 6 April 2016, the State is generally responsible for all the increases on the pre April 1988 GMPs, and increases above 3% per annum on the post April 1988 GMPs.

Where the GMP has not yet come into payment, the amount used is the annual amount including revaluation to the calculation date with Section 148 orders and any late payment uplifts as appropriate.

Where the GMP is already in payment, the amount used is the annual amount in payment. This includes any pension increases on GMP accrued after 6 April 1988.

The sum of the GMP in respect of service up to 5 April 1988 and 15% of the GMP in respect of service after that date should be multiplied by the appropriate factor in the tables and the resulting figure used in the cash equivalent calculation.

Guaranteed Minimum Pension for members who reach SPA on or after 6 April 2016

Members who reach SPA on or after 6 April 2016 will receive price indexation in the Armed Forces Pension Scheme in respect of the GMP portion of their pension. No GMP adjustment should be made in respect of these cases.

Where the benefits have not yet come into payment, the amount quoted is the statutory CETV. The CETV methodology and factors are used even in cases where the member is not entitled to transfer his/her benefits.

The benefits to be valued for serving personnel are those that would be payable if the member had left service at the relevant date - either deferred benefits or the payment of immediate benefits. Those with less than 3 months of service would normally be entitled only to a refund of contributions. However, the deferred benefits should be valued for divorce purposes in such cases.

AFPS75 and AFPS05 members still in service at the calculation date who are over the age of 55 are entitled to receive their pension benefits immediately on leaving service. The section entitled Active Members Entitled to Pension Benefits Immediately therefore applies to these members.

The benefit entitlements of AFPS75 members who have satisfied the criteria to receive Immediate Pension benefits should be valued in accordance with Active Members Entitled to Pension Benefits Immediately.

AFPS05 Members who retired on Tier 1 ill health benefits should be treated as deferred members as they are not provided with pension benefits until age 65. This section therefore applies to these members.

AFPS05 members in receipt of EDPs are treated as deferred members as EDPs are not considered to be pension benefits. This section therefore applies to these members.

Calculation of the Cash Equivalent Transfer Value

For deferred members and active members entitled to deferred benefits from age 60/65, the transfer value should be calculated in accordance with the standard procedures for calculating CETVs.

For reference, the tables in the Consolidated Factor Workbook used for calculating CETVs are:

Table 201- for deferred benefits payable from age 60
Table 202- for deferred benefits payable from age 65

Table 201 factors should only be applied to benefits accrued in AFPS 75 before 6 April 2006.

The cash equivalent for either an active not entitled to immediate benefits or a deferred member should be calculated as follows:

CE = (MP x F_p) + (LS x F_ls) + (SUR x F_sur) - (PRE GMP + 0.15* x POST GMP) x F_gmp

Where:

MP = member's deferred pension

LS = member's lump sum

SUR = pension payable on the death of the member to their spouse or partner

PRE GMP = annual GMP accrued before 6/4/1988, including revaluation

POST GMP = annual GMP accrued after 6/4/1988, including revaluation

F_p = factor for member's pension - Table 201 or 202

F_ls = factor for member's lump sum - Table 201 or 202

F_sur = factor for survivor's pension - Table 201 or 202

F_gmp = factor for GMP saving - Table 201 or 202 (factor should be selected taking into account the date at which the member reaches State Pension age - see the section entitled Adjustments for Guaranteed Minimum Pension)

* For a female under age 60 with a deferred pension payable from age 65, replace 0.15 with 3.5. For a female over age 60 with a deferred pension payable from age 65, use the GMP factors in table 202C.

Members with an existing pension debit

The transfer value should be calculated in two stages. Firstly the transfer value should be calculated ignoring the pension debit. Secondly, the value of the pension debit should be calculated as the transfer value of a deferred pension of the same amount as the debit. The CETV is the gross transfer value less the value of the pension debit.

This section sets out the method for calculating the pension credit payable to the ex-spouse following the issue of a pension sharing order by the Court.

All references to ex-spouse in this document can also be interpreted as an ex-civil partner or another ex-partner that is eligible for a pension on the member's death.

Table 307 in the Consolidated Factor Workbooksets out the factors needed to calculate the pension credit for the ex-spouse assuming that it will be paid when the ex-spouse reaches age 65 or immediately if the ex-spouse is already age 65 or over.

The calculation factors should be based on the age of the ex-spouse as at the calculation date and the form of the pension share benefits awarded. The age of the member should not be used. The factors should be taken from the tables in force at the valuation day with reference to the age of the ex-spouse as at the calculation date.

Calculation where the member is a current pensioner

If the member is a current pensioner and has received their lump sum, no lump sum payment may be made to the ex-spouse and the pension credit is calculated using the following formula:

Pension credit = ESCE / F_p

ESCE* = the ex-spouse cash equivalent - see the section entitled Calculation of the value of the shareable rights

F_p = factor for ex-spouse pension - Table 307

* For divorces under Scottish Law, use MA as specified in the section entitled Calculation of the value of the shareable rights

Calculation where the member is an active member or a deferred pensioner

If the member is an active member or a deferred pensioner and has not received their lump sum, the ex-spouse will be entitled to a lump sum of 3 times the pension credit.

This section applies also in cases where the member's benefits have been assumed to be payable immediately (see the sections entitled Active members and deferred pensioners and Active members entitled to pension benefits immediately).

If the ex-spouse is aged 65 or over, the lump sum will be due immediately. The calculation of the pension credit therefore depends on whether the ex-spouse is aged under 65 or over 65.

Where the ex-spouse is aged under 65, the pension credit is calculated using the following formula:

Pension credit = ESCE / (F_p + 3 x F_ls)

ESCE* = the ex-spouse cash equivalent - see the section entitled Calculation of the value of the shareable rights

F_p = factor for ex-spouse pension - Table 307

F_ls = factor for ex-spouse lump sum - Table 307

* For divorces under Scottish Law, use MA as specified in the section entitled Calculation of the value of the shareable rights

Where the ex-spouse is aged 65 or over, the pension credit is calculated using the following formula:

Pension credit = ESCE / (F_p + 3 x F_ls)

ESCE* = the ex-spouse cash equivalent - see the section entitled Calculation of the value of the shareable rights

F_p = factor for ex-spouse pension - Table 307

F_ls = factor for ex-spouse lump sum - Table 307

* For divorces under Scottish Law, use MA as specified in Calculation of the value of the shareable rights

Pension credit benefits

The lump sum (where applicable) will be 3 times the annual rate of the pension credit when it comes into payment.

The pension credit benefits will be paid when the ex-spouse reaches age 65, or immediately if the ex-spouse is already over age 65. However, the pension credit member will have the option of claiming the pension credit benefits on reaching at least age 55.

If the pension credit and lump sum (where applicable) come into payment earlier than assumed at the time of the pension sharing order, the credits should be adjusted. The benefits will be adjusted for early payment using factors in Table 311 in the Consolidated Factor Workbook. For further details see the section entitiled Adjusting the pension credit for early/late payment.

The ex-spouse's pension credit will be subject to pension increases under the provisions of the Pensions (Increase) Acts.

Pension credits awarded before 6 April 2009 have been calculated assuming they will be payable when the ex-spouse reaches age 65, except for specific AFPS75 cases (see point below).

For AFPS 75 members, pension sharing orders implemented before 6 April 2006 assumed pension credit benefits were payable from age 60. After 6 April 2006, they were assumed to be payable at age 65.

For pension sharing orders implemented before 6 April 2009, the pension credit member now has the option of claiming the pension credit benefits on reaching at least age 55.

For pension sharing orders implemented on or after 6 April 2009 the pension credit awarded has been calculated assuming it will be payable when the ex-spouse reaches age 65 or immediately if the ex-spouse is already over age 65. However, the pension credit member has the option of claiming the pension credit benefits on reaching at least age 55.

If the pension credit and lump sum come into payment earlier/later than assumed at the time of the pension sharing order, the credits should be adjusted. The pension credits will be adjusted for early/late payment using factors in Table 311 in the Consolidated Factor Workbook.

This is because the credit will be paid over a longer/shorter period than assumed in the original credit calculation. The pension credit benefit will be:

Pension = PENCRE x PI x (MEMERF at actual pension age / MEMERF at assumed pension age)

Lump sum = LSCRE x PI x (LSERF at actual pension age / LSERF at assumed pension age)

PENCRE = deferred pension credit at divorce - see section entitled Calculation of the pension credit for the ex-spouse

LSCRE = deferred lump sum credit at divorce - see section entitled Calculation of the pension credit for the ex-spouse

PI = the pension increase uprating factor between divorce and date the pension credit is paid.

MEMERF = early retirement factor - Table 311 (Normal Health)

LSERF = early retirement factor - Table 311 (Normal Health)

The early retirement factors (MEMERF and LSERF) to be used for adjusting pension credit benefits at the date of commencement are the same factors that are used for adjusting the member's pension debit at retirement.

This section sets out the method and instructions for calculating the pension debit to be applied to the member's benefits following the issue of a pension sharing order by the Court:

Where the member is a pensioner, the debit will apply to the member's own pension with immediate effect and also to the pension payable to a future surviving spouse, civil partner or other qualifying partner on the member's death.
Where the member is a deferred pensioner, the debit will apply to the member's pension at the point when the pension becomes payable. A corresponding debit is also applied to the member's lump sum on retirement. The debit will also apply to the pension payable to a future surviving spouse, civil partner or other qualifying partner on the member's death.
Where the member is an active member and is not entitled to receive benefits immediately on leaving service, the debit will be calculated assuming retirement at age 65. Where the member is entitled to receive benefits immediately on leaving service, the debit will be calculated assuming retirement at the effective date of the pension sharing order. If the member retires at a different age, the debit will be adjusted. A corresponding debit is also applied to the member's lump sum on retirement. The debit will also apply to the pension payable to a future surviving spouse, civil partner or other qualifying partner on the member's death.
For AFPS 75 members entitled to a deferred pension at the time of the pension sharing order, two debits may need to be calculated, one for benefits in respect of service pre-6 April 2006 and the other in respect of service post-5 April 2006.

Pension debit for current pensioner

The pension sharing order will specify the percentage of the member's benefits that the ex-spouse or ex-civil partner will be entitled to, for divorces in England & Wales. For Scottish divorces the value of the cash equivalent to be shared will be specified, and the proportion will be calculated as described in the section entitled Calculation of the value of the shareable rights.

The debit applying to the member's pension will be:

MEMDEB = MP x Appropriate percentage %

Where:

MP = member's pension

The debit applying to any future surviving spouse, civil partner or other qualifying partner's pension will be:

SURDEB = SUR x Appropriate percentage %

Where:

SUR = pension payable on the death of the member to their spouse

The debit applying to the GMP will be:

PREGMPDEB = PRE GMP x Appropriate percentage %

POSTGMPDEB = POST GMP x Appropriate percentage %

Where:

PRE GMP = annual GMP accrued before 6/4/1988

POST GMP = annual GMP accrued from 6/4/1988

The amounts should be the same as used to recalculate the cash equivalent of the member's benefits in the section entitled Calculation of the value of the shareable rights.

Pension debit for a deferred pensioner

The principle is the same as for the pensioner, except that the debit will not start to be deducted until the member's benefits come into payment, and there is also a debit to be applied to the lump sum.

The debit should be expressed as a debit to the member's benefits at exit:

MEMDEB = Member's pension at exit x Appropriate percentage %

LSDEB = Lump sum at exit x Appropriate percentage %

SURDEB = Survivor's pension at exit x Appropriate percentage %

PREGMPDEB = PRE GMP at exit x Appropriate percentage %

POSTGMPDEB = POST GMP at exit x Appropriate percentage %

At retirement, both the benefit and the debit should be revalued from the date of exit to the date of retirement, and the revalued debit should be subtracted from the revalued benefit.

If the member's deferred pension and lump sum come into payment earlier than assumed at the time of the pension sharing order, whether on voluntary early retirement or on grounds of ill health, the debits applied should be adjusted.

This is because the debit will be applied over a longer period than assumed in the original debit calculation. The pension debit will be:

Member's pension debit = MEMDEB x PI x (MEMERF at actual pension age / MEMERF at assumed pension age)

Lump sum debit = LSDEB x PI x (LSERF at actual pension age / LSERF at assumed pension age)

Survivor's pension debit = SURDEB x PI

Where:

MEMDEB = pension debit to the member's pension at exit

LSDEB = pension debit to the lump sum at exit

SURDEB = pension debit to the spouse's pension on the member's death after exit

PI = the pension increase factor between exit and retirement

MEMERF = early retirement factor - Table 311 (Normal Health) or 312 (Ill Health)

LSERF = early retirement factor - Table 311 (Normal Health) or 312 (Ill Health)

Pension debit for an active member

The principle is that the debit acts like a negative deferred pension. The debit should be expressed as a debit to the member's benefits, as used to recalculate the cash equivalent of the member's benefits:

MEMDEB = Member's pension used in cash equivalent calculation x Appropriate percentage %

LSDEB = Lump sum used in cash equivalent calculation x Appropriate percentage %

SURDEB = Survivor's pension used in cash equivalent calculation x Appropriate percentage %

PREGMPDEB = PRE GMP used in cash equivalent calculation x Appropriate percentage %

POSTGMPDEB = POST GMP used in cash equivalent calculation x Appropriate percentage %

When the member retires, the total pension is initially calculated ignoring the pension debit. The pension is then reduced to allow for the pension debit. The debit should be revalued from the transfer day up to the date of retirement.

The pension debit applied to the member's pension and lump sum is increased if the benefits are put into payment after the assumed pension age, irrespective of whether or not the retirement is on grounds of ill-health. This is because the debit will be applied over a shorter period than was assumed in calculating the original amount of the debit, and so a higher amount should be deducted.

The pension debit will be:

Member's pension debit = MEMDEB x PI x (MEMERF at actual pension age / MEMERF at assumed pension age)

Lump sum debit = LSDEB x PI x (LSERF at actual pension age / LSERF at assumed pension age)

Survivor's pension debit = SURDEB x PI

Where:

MEMDEB = pension debit at divorce

LSDEB = pension debit at divorce

SURDEB = pension debit at divorce on the spouse's pension on the member's death

PI = the pension increase uprating factor between divorce and the date of retirement

MEMERF = early retirement factor - Table 311 or 312

LSERF = early retirement factor - Table 311 or 312

The formulae above should also be used where the active member is in AFPS05 and at least age 55, in RFPS and at least age 60, or is in AFPS75 and eligible for Immediate Pension benefits. However, as the member is entitled to receive benefits immediately, the debit is also assumed to commence immediately. The assumed pension age for the debit in these cases is therefore the member's age in years and months at the calculation date. The formulae make an adjustment to the debits if the member retires at a later date.

This adjustment does not apply to the debit applied to the spouse's pension or the debit applied to the GMP.

Pension debits - future spouses

The benefits payable to a new spouse, new civil partner or other partner who is eligible to a pension on the member's death should be reduced by the survivor's pension debit, revalued using the pension increase uprating factors.

No spouse or civil partner's benefits will be payable to the person who was party to the divorce resulting in the pension sharing order (except in the unlikely situation that the member remarried or entered into a new civil partnership with his or her ex-spouse or ex-civil partner).

No adjustment is made to the debit applied to the spouse, civil partner or other qualifying partner's pension if the member retires earlier or later than assumed when calculating the pension debit.

Pension debits - other benefits

No debit will be applied to a child's pension.

No debit will be made to the lump sum death grant payable to serving personnel who were active members at the date of their death.