A member may have an ongoing periodical payments election to purchase added pension through regular contributions in the member's relevant legacy scheme. The amount of added pension bought under a periodical payments election is calculated for each scheme year as set out below.
The factors for the purpose of these calculations are per £1 pa of added pension purchased.
A member may buy added pension by opting for a deduction from their pensionable earnings expressed as either a fixed amount or percentage of their pay.
The scheme year runs from 1 April to 31 March.
Factors should be selected with reference to the member's:
- age in complete years,
- for a nuvos member, whether the pension is for the member only, or for all beneficiaries,
- sex, if the member is a nuvos member who is buying member only benefits (however please note that the male and female factors are unisex),
- section of the scheme (classic, classic plus, premium and nuvos) and
- for the revaluation factor the number of 1 Aprils falling between the calculation date and the NPA.
To calculate the amount of added pension to be awarded for a given scheme year, the total amount of periodic contributions over the scheme year is required.
The amount of pension added for a scheme year needs to be adjusted to allow for any variations during the year in the level of contributions due to pay awards, members exiting active service or periods of assumed pay.
The amount of added pension, P, added to a member's pension at the end of the period of contributions during that scheme year is determined as follows:
P = C / (FxRC x FyReval)
Where:
C is the total amount of periodic contributions over the scheme year
x is the member's age in complete years at the start of the scheme year
FxRC is the regular contribution factor at age x from relevant table (Tables x-709 to x-711 of the consolidated factors workbook)
FyReval is the relevant revaluation factor for a member with y 1 Aprils from the start of the next scheme year (inclusive) up to and including NPA (Table x-001 of the consolidated factors workbook)
A classic member, in addition to their added pension at retirement, is entitled to a lump sum equal to 3 times the added pension at retirement (before commutation, allocation or inverse commutation).
The amount of level monthly payments, MP, required to purchase a given amount of added pension if paid over a single full scheme year is determined as follows:
MP = (P x FxRC x FyReval) / 12
Where:
P is the amount of added pension the member wishes to buy
x is the member's age in complete years at the start of the scheme year
FxRC is the regular contribution factor at age x from relevant table (Tables x-709 to x-711)
FyReval is the relevant revaluation factor for a member with y 1 Aprils from the start of the scheme year (inclusive) up to and including NPA (Table x-001)
A classic member, in addition to their added pension at retirement, is entitled to a lump sum equal to 3 times the added pension at retirement (before commutation, allocation or inverse commutation).
The formula used for the calculation of level for monthly payments above should only be used for illustrative purposes and only for cases where level payments are to be made over a complete scheme year. It is not appropriate for cases where a percentage of salary is to be paid to buy added pension.
