Members that continue to work after their NPA/EPA will have their benefits increased for late payment. This is done by an 'age addition' that is added to the member's account on each scheme anniversary (1 April) after the member reaches NPA/EPA and is still in service. An 'assumed age addition' is added to the member's account on the date that they retire or leave service, if the date they retired or left service was after NPA/EPA.

Age addition factors only apply to members who remain in active service after NPA/EPA. Members who retire after NPA/EPA from deferred status should receive a late payment supplement, not an age addition, in respect of the period of deferment after NPA/EPA. Members who leave active service after NPA/EPA and then further delay retirement will receive an age addition and a late payment supplement. Separate guidance applies for late payment supplements.

In order to calculate the appropriate age addition for a scheme year, a percentage is applied to the 'opening balance' of the relevant description of accrued pension for the previous scheme year.

For example, to calculate an age addition to be applied on 1 April 2025 a percentage is applied to the 'opening balance' of pension for the year 2024-25, not the opening balance for the year 2025-26. The opening balance for 2024-25 can be thought of as the balance at 31 March 2024.

The 'opening balance' in relation to a description of pension is as defined in scheme regulations. In particular, we understand that the opening balance on a given scheme anniversary includes the opening balance at the previous scheme anniversary, indexation on the opening balance (at the previous scheme anniversary), earned pension applicable over the previous scheme year and any age addition awarded at the start of the previous scheme year.

The age addition is added to the member's account on the scheme anniversary but after the indexation has been determined on the opening balance for that year. So at 1 April the indexation on the opening balance at that date is determined first and added to the account and then the age addition amount (based on the opening balance for the previous scheme year) is added.

The age addition percentage applicable to the member's relevant opening balance is derived from unisex factors. Factors are taken from tables P2AA1 and P2AA2. Table P2AA2 is used to calculate the age addition percentage for added (self only) pension. Table P2AA1 is used to calculate the age addition percentage for all other descriptions of accrued pension.

For the member's first age addition after passing NPA/EPA the appropriate factors are based on the member's age at the first scheme anniversary after NPA/EPA and the member's NPA/EPA.

The percentage used to calculate the first age addition is derived:

Age addition percentage = [(Factor at age at first scheme anniversary after NPA or EPA) / (Factor at age at NPA or EPA)] - 1

Where:

Age addition percentage is applied to the opening balance (of the relevant accrued pension) for the previous scheme year.

Factors are taken from:

• Table P2AA2 for added (self only) pension,
• Table P2AA1 for all other descriptions of accrued pension,

and the member's age is that at the relevant date in complete years and months with part months ignored.

For subsequent age additions the appropriate factors are based on the member's age at current scheme anniversary and the member's age at previous scheme anniversary.

The percentage used to calculate subsequent age additions is derived:

Age addition percentage = [(Factor at age at current scheme anniversary) / (Factor at age at previous scheme anniversary)] - 1

Where:

Age addition percentage is applied to the opening balance (of the relevant accrued pension) for the previous scheme year.

Factors are taken from:

• Table P2AA2 for added (self only) pension,
• Table P2AA1 for all other descriptions of accrued pension,

and the member's age is that at the relevant date in complete years and months with part months ignored.

Where a member who is over their NPA/EPA leaves active service part way through a scheme year (either to become a deferred member or to retire) then an assumed age addition is added to the member's account at retirement/leaving date to reflect the period between the previous scheme anniversary and date of leaving/retirement. There will also be an assumed age addition if a member passes NPA/EPA and at a later date within the same scheme year leaves or retires.

The assumed age addition is calculated similarly to the age addition described above, except that the appropriate factors are based on the member's age at deferment or retirement and the greater of member's NPA/EPA or age at previous scheme anniversary.

The percentage used to calculate the assumed age addition is derived:

Assumed age addition percentage = [(Factor at age of date of leaving or retirement ) / (Factor at age of previous scheme anniversary or NPA or EPA if later)] - 1

Where:

Assumed age addition percentage is applied to the opening balance (of the relevant accrued pension) for the current scheme year (i.e. this is the same opening balance as would have been used had the member remained in service until the next 1 April).

Factors are taken from:

• Table P2AA2 for added (self only) pension,
• Table P2AA1 for all other descriptions of accrued pension,

and the member's age is that at the relevant date in complete years and months with part months ignored.

Our understanding is that a member who leaves active service after NPA/EPA but does not retire immediately can receive age addition in respect of service up to leaving active service and also a late payment supplement in respect of the period from their leaving date to their eventual retirement date.

The following points should be noted:

1. Age additions and assumed age additions are calculated before the commutation option is exercised.
2. The age additions and assumed age additions applied to the member's pension should also apply to the contingent partner's pension (where one is payable).

The following table sets out more detail of the calculation of the age addition and assumed age addition, including the treatment of the year in which the member attains NPA and the year of retirement and how the age addition calculation should be done where it covers a period in which factors are updated. It shows the calculation method for a member reaching their NPA of 66 years on 1 September 2021, before retiring on 15 August 2023 at age 67 years 11 complete months.

Our understanding is that Pension Credit pensions should not receive any increase on late retirement.

Pension Debit pensions should be treated in the same way as a deferred member's pension. Therefore on late retirement they should be increased by a late payment supplement, not an age addition. Please refer to the late payment supplements guidance.

This guidance does not cover the adjustments to apply to scheme pays debits on early or late retirement. This is covered separately in the scheme pays guidance.

Added pension should receive age additions (or assumed age additions, as appropriate) as described above. Only NPA is relevant for Added Pension and references to EPA should be ignored when considering Added Pension for the purposes of determining age additions or assumed age additions. Note that different factors are used to calculate the age addition for added (all beneficiaries) pension (table P2AA1) and added (self only) pension (table P2AA2).