This guidance is addressed to HSC as administrator of the Health and Social Care Pension Scheme 2015 ("HSCPS 2015"). It sets out the factors required to determine the scope for payment of contributions, and the amount payable by a member, to secure early retirement reduction buy-out on early retirement.

A member who has a Normal Pension Age (NPA) over age 65 may elect to pay contributions to buy out up to three years' actuarial reduction. This "buy-out agreement" is referred to as an early retirement reduction buy-out (ERRBO) in this note.

ERRBO may be secured for all pension earned in any scheme year. Members have limited options to increase the amount of contributions paid for this purpose and all contributions are deemed payable under a single ERRBO agreement. There is no option to reduce ERRBO contributions though members may suspend and recommence such contributions in limited circumstances. The limitations on increasing, suspending and recommencing ERRBO contributions are also covered in this note.

The facility to pay ERRBO contributions is only offered to contributing members of the HSCPS 2015.

This guidance is limited to the scope outlined above. The scope for securing ERRBO is related to any other voluntary contributions being paid to the 2015 scheme. Other guidance covers the factors and limitations applicable to other forms of voluntary contributions.

For scheme years where an ERRBO agreement is in place the member is effectively treated as having a reduced NPA for the purposes of determining benefits payable. The effective NPA is equal to the member's actual NPA at the time of retirement (equal to a member's State Pension Age as specified in legislation at that date) less the 'early retirement reduction buy out' secured. When determining amounts payable under ERRBO agreements the cost is linked to NPA as set out in stated Government policy.

The Calculation of benefits for periods during which ERRBO contributions have been paid section briefly outlines the calculation of such benefit entitlement in circumstances where no actuarial factors are required to determine those benefits. Where actuarial factors are required for determining benefits payable to members who have ERRBO agreements, factors and instructions on their application in the calculation of benefits is dealt with within the relevant the Government Actuary's Department (GAD) guidance. Guidance for early and late retirements are particularly relevant.

ERRBO agreements may only commence on any 1 April, or otherwise with effect from the first day of pensionable service in any scheme year. Requests for ERRBO agreements must be received within 3 months of the date of commencement and contributions will be backdated to this date. Any requests received outside of this 3-month period will apply from the start of the following scheme year.

Increases in the rate of ERRBO contributions (which are treated as payable under a single ERRBO agreement) may only take effect from any 1 April, or otherwise from the first day of pensionable service in any scheme year (for example following a break in service).

An ERRBO agreement may only cease or be suspended with effect from any 31 March or otherwise from the last day of pensionable service in any scheme year. On earlier cessation within a scheme year any ERRBO contributions paid in that scheme year should be refunded to the member and the early retirement reduction buy-out agreement will not apply for any pension earned in that scheme year.

The restrictions on commencement and cessation of an ERRBO agreement means all benefits earned during the period ERRBO contributions are paid will be subject to a specified effective "reduced retirement age" (RRA). This is the age from which retirement benefits earned in any year will be available with no actuarial reduction for early payment. A member may have more than one RRA if additional ERRBO agreements are made.

The additional contribution rate payable under an ERRBO agreement is determined based on a member's age (in complete years) at the start of the ERRBO agreement. The additional rate payable at subsequent agreement to increase ERRBO contributions is determined based on the member's age (in complete years) at the increase date. All rates are reassessed regularly and the revised rates following each revision of factors should be based on the member's age (in complete years) at the date of the initial election and increase date(s) if applicable.

Any additional contributions payable under an ERRBO agreement will cease at NPA. Where the ERRBO contributions continue beyond selected RRA, all pension accrued during ERRBO payment will be subject to late retirement increases as described in the early and late retirement guidance.

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.