The first stage will be to provide the member with a calculation of the cash equivalent of their entitlements in the scheme, at the date of the calculation (or other date specified by the Court, if applicable).
Members already in receipt of benefits do not have an entitlement to a cash equivalent transfer value. The pensioner cash equivalent value can be calculated using the method in this note but should be used for divorce purposes only.
There are two sets of tables:
- Table F1 and F2 (Tables 305 and 306 in the consolidated factors spreadsheet): Pensioners who retired on ordinary grounds
- Table G1 and G2 (Tables 307 and 308 in the consolidated factors spreadsheet): Pensioners who retired on ill health grounds
The main difference between Table F1/F2 and Table G1/G2 is that Table G1/G2 allows for the heavier mortality experienced on average by those who retire due to ill health.
Table G1/G2 should only be used for ill health pensioners under the age of 55 where full pension increases are payable in the period up to age 55. If pension increases are not payable before age 55 then the case should be referred to the Welsh Government.
The pensioner cash equivalent should be calculated as follows:
Cash equivalent = (CP x Fp) + (SUR x Fsur) - (PRE GMP + Gpost88 x POST GMP) x Fgmp
Where:
CP is the current member's pension, see the Pension benefits section
SUR is the pension payable on the death of the member to their spouse or partner, see the Pension benefits section
PRE GMP is the annual GMP accrued before 6 April 1988, including revaluation to the calculation date, see the Guaranteed Minimum Pension section (for members who reached SPA before 6 April 2016) or zero (for members who reached SPA on or after 6 April 2016)
POST GMP is the annual GMP accrued after 6 April 1988, including revaluation to the calculation date, see the Guaranteed Minimum Pension section (for members who reached SPA before 6 April 2016) or zero (for members who reached SPA on or after 6 April 2016)
Fp is the factor for member's pension - Table F1, F2, G1 or G2
Fsur is the factor for survivor's pension - Table F1, F2, G1 or G2
Fgmp is the factor for GMP saving - Table F1, F2, G1 or G2
Gpost88 is the conversion factor applied to GMP deduction, for GMP amount in respect of service after 5 April 1988.
Factors should be selected depending on whether a member retired on grounds of ill-health or not and with reference to their sex and age last birthday at the calculation date.
The factors in the normal health tables run from age 55. Divorce cases where the member is under 55 and in receipt of benefits other than an ill health pension should be referred to GAD.
Separate cash equivalents should be calculated and quoted in respect of a member's benefits in the 1992 scheme, NFPS or 2015 sections.
The member's pension (CP) should be the rate of pension in payment at the calculation date, including additional pension from Continuous Professional Development (CPD) or Long Service Increment (LSI) contributions. The survivor's pension (SUR) should be the rate payable if the member had died immediately before the calculation date. The last pension increase should be that awarded up to and including the April increase immediately before the calculation date.
If the member's pension is reduced due to abatement or suspension due to reemployment, then the abatement reduction should be ignored for the purpose of this calculation. Benefits should be calculated as though the member had ceased reemployment on the date of calculation, and valued accordingly.
For members who reached State Pension age before 6 April 2016, the cash equivalent must be adjusted to reflect increases on the Guaranteed Minimum Pension (GMP) that are the responsibility of the State. The State is generally responsible for all the increases on the pre April 1988 GMPs, and increases above 3% per annum on the post April 1988 GMPs. Separate pre and post 1988 GMP figures need to be used.
Where the member has passed GMP Payment Age, the pre and post 1988 GMP amounts to use are the current annual amounts of GMP in payment. If the member has passed GMP Payment Age, and their GMP is not yet in payment, then the case should be referred to GAD.
