This guidance is addressed to the Department of Finance (DoF) as scheme manager of the Principal Civil Service Pension Scheme (Northern Ireland) (PCSPS(NI)).

The purpose is to provide DoF with guidance on how to calculate the cost of buying out the full actuarial reduction for a member taking early retirement.

Scheme members who are eligible to take actuarially reduced early retirement have the option to pay a lump sum to the scheme and then receive an unreduced pension and lump sum.

This guidance does not apply to benefits in the alpha scheme. Separate guidance can be found in the actuarial reduction buy out guidance for the alpha scheme.

In the remainder of this guidance, the lump sum payment required to buy out the actuarial reduction is referred to as the actuarial reduction buy out (ARBO) cost. The ARBO cost should be calculated before the member commutes pension for lump sum and before offsetting any divorce or scheme pays debits.

The ARBO cost for added pensions will be calculated in the same way as for main scheme benefits (and using the same factor tables) as for main scheme benefits.

The following changes have been made when reviewing this guidance:

• Important information around the expected audience for the guidance, use of the guidance, review of factors, compliance and limitations applies across all sets of guidance. Rather than being repeated in each set of guidance, this can now be found on the scheme home page. It is important to read this information alongside the guidance.
• Calculation methodology: No changes have been made to the calculation methodology.
• Examples: There are no examples in this guidance. Worked examples, using the calculation methodology, can be found in prior versions of the guidance (though please note that these use historic factors).
• Factor tables: The "Factor Tables" tab contains the names of the tables that are referenced in the calculation methodology. The tables of factors themselves can be found in the most recently published "Consolidated Factors Workbook" which is available by clicking the "Download current Consolidated Factors Workbook" button on the scheme's home page.
• Assumptions: The key assumptions underlying the factors in each note are contained in the Consolidated Factors Workbook.
• Regulations: The regulations that require the production of the actuarial factors and/or guidance that is the subject of this note are summarised in the "Regulations" tab.

This guidance does not apply for PCSPS(NI) members who retire before age 55 and whose deemed date for pension increases occurs before the date of early retirement. These should be treated on a case by case basis.

We do not anticipate any other special cases not covered by this guidance. However, if any do occur they should be referred to the Government Actuary's Department (GAD).