The ARBO cost, for a classic or classic plus member retiring before NPA, should be calculated as:

ARBO cost = P x F_x + (LS x (1 - ERF(LS)_x))

Where:

x is the member's age at retirement date in years and complete months

P is the unreduced pension at retirement date (including added and transfer in pension)

F_x is the relevant factor for a member aged x, taken from:

• Table P1ARBO60 for a member with NPA 60
• Table P1ARBO65FS for a member with NPA 65

LS is the unreduced lump sum at retirement date

ERF(LS)_x is the lump sum early retirement factor for a member aged x

The ARBO cost should be calculated before the member commutes pension for lump sum and before offsetting any divorce or scheme pays debits.

The lump sum early retirement factor, ERF(LS)_x, is the actuarial reduction factor that would apply to the member's lump sum, if they received actuarially reduced benefits and did not take up the buy out option. The relevant tables are Table P1ER60LS1 for NPA 60 members and Table P1ER65LS1 for NPA 65 members.

Pension credit members in classic and classic plus have the option to buy out the actuarial reduction. The ARBO cost should be calculated as described above.