The scheme regulations require the "opening balance" of the added pension (AP) account at the start of a Scheme Year to include the added pension purchased throughout the previous year.

A Scheme Year is from 1 April to 31 March.

Added pension can be purchased either by a lump sum or by regular monthly contributions during a particular scheme year.

When a member makes an AP election, a check needs to be carried out to ensure the member has enough headroom within the overall extra pension limit to purchase the desired amount of AP. The amount of pension from this election to count against the overall limit will simply be the amount of AP the member has elected to purchase.

If the member has previously made an AP election, the amount of pension from any earlier AP elections to count against the extra pension limit will be the amount of AP the member has elected to purchase, or the paid-up credit, increased in line with inflation to the date of the new election.

The scheme regulations set an overall limit on the Added Pension account. This AP limit was £6,500 for 2015/16 scheme year and the limit will change in accordance with the scheme regulations in subsequent years. This guidance does not set out how the overall limit should be applied in practice and this is something that the scheme manager will separately have to ensure is not breached.

The factors to be used are the factors to convert lump sum contributions into Added Pension.

The factors are unisex and are shown per £1 pa of added pension purchased.

The factors should be selected with reference to the member's:

• age last birthday at the calculation date
• for the revaluation factor, the number of complete scheme years falling between the date of payment and a member's normal pension age

If a member purchases added pension by a lump sum payment, then the amount to be credited is either that set out on any statement of amount of added pension given to the member following their election to buy added pension by lump sum, or the amount determined as at the date of receipt of payment by the member if this occurs more than 1 month after the date of the statement.

To purchase a specific increase to a member's Added Pension account for the relevant Scheme Year, then the lump sum payment (LS) required is determined as follows:

LS = P x F_x x F_y^Reval

Where:

P is the amount of added pension purchased

x is the member's age last birthday on the calculation date

Fx is the is the lump sum factor at age x from Table 1 - Lump Sum factors (Table x-701)

Fy^Reval is the relevant revaluation factor for a member with y complete scheme years between calculation date and up to and including NPA from Table 2 - Added Pension Revaluation factors (Table x-702)

Where the calculation date is either the date of the statement of amount of added pension to be purchased or the date of receipt of payment if this occurs more than 1 month after the date of the statement.

The amount of added pension, P, added to a member's Added Pension account for the relevant Scheme Year in respect of a lump sum payment received is determined as follows:

P = LS/(F_x x F_y^Reval)

Where:

LS is the amount of Lump Sum payment

x is the member's age last birthday on the calculation date

F_x is the lump sum factor at age x from Table 1 - Lump Sum factors (Table x-701)

F_y^Reval is the relevant revaluation factor for a member with y complete scheme years between calculation date and up to and including NPA from Table 2 - Added Pension Revaluation factors (Table x-702)

Where the calculation date is either the date of the statement of amount of added pension to be purchased or the date of receipt of payment if this occurs more than 1 month after the date of the statement.

If a member purchases added pension by periodical payments, the amount of pension, P, added to a member's Added Pension account at the end the Scheme Year is determined in a similar way to that described in Lump sum payments above, except that:

• an adjustment is applied to the total amount of periodic contributions over the Scheme Year in order to accumulate contributions paid over the Scheme Year to the end of the Scheme Year;
• the revaluation factor is based on the number of complete Scheme Years falling between the closing date of the Scheme Year during which the contributions are paid and a member's normal pension age; and
• the formula to be used for the purpose of this paragraph is as follows:

P = (C x Adj) / (F_x x F_y^Reval)

Where:

C is the total amount of periodic contributions over Scheme Year

Adj is the Periodical Payments Adjustment Factor from Table 1 - Lump Sum factors (Table x-701)

x is the member's age last birthday at the end of the Scheme Year

F_x is the regular contribution factor at age x from Table 1 - Lump Sum factors (Table x-701)

F_y^Reval = is the relevant revaluation factor for a member with y complete scheme years up to and including NPA from Table 2 - Added Pension Revaluation factors (Table x-702)

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 F_x x F_y^Reval) / (12 x Adj)

Where:

P is the amount of added pension the member wishes to buy

Adj is the Periodical Payments Adjustment Factor from Table 1 - Lump Sum factors (Table x-701)

x is the member's age last birthday at the end of the Scheme Year

F_x is the lump sum contribution factor at age x from Table 1 - Lump Sum factors (Table x-701)

F_y^Reval is the relevant revaluation factor for a member with y complete Scheme Years up to and including NPA from Table 2 - Added Pension Revaluation factors (Table x-702)

If periodical payments continue into a further Scheme Year, the formulae above would need to be recalculated for the payments made in this further Scheme Year with new factors appropriate for the member's situation in that year.