The calculations below are appropriate for members subject to benefit reduction due to AA charges retiring at their normal pension age from either active or deferred status.
The factors used for the calculations are in Table 601 in the consolidated factors workbook.
The appropriate factor will depend on the member's age (last birthday) at their date of retirement. Factors are selected according to whether members are in the 1995 or 2008 Section.
The steps necessary to calculate a benefit reduction for members retiring in normal health at their normal pension age are described below for both the 1995 and 2008 Sections.
For Choice members, taking the Mandatory Lump Sum is deemed to be a commutation event and therefore the benefit reduction due to Scheme Pays applies to the pension benefit only.
The debits calculated below should be applied to main scheme benefits before any member options are exercised, e.g. commutation.
Amounts at retirement | Notation |
Total DC pot | DC |
Main Scheme Pension | P |
Main Scheme Lump Sum (1995 Section only) | LS |
Dependant's Pension | DP |
Member's Pension debit | PD |
Member Lump Sum debit (1995 Section only) | LSD |
Net Main Scheme Pension | NP |
Net Main Scheme Lump Sum (1995 Section only) | NLS |
Net Dependant's Pension | NDP |
1995 Section
Step | Item | Calculation |
1 | PD | = DC / (Relevant Factor from Table 601 in the consolidated factors workbook) |
2 | LSD | = 3 x PD |
Net benefits payable on age retirement: | ||
3 | ||
a) | NP | = P - PD |
b) | NLS | = LS - LSD |
c) | NDP | = DP |
2008 Section (including Choice members)
Step | Item | Calculation |
1 | PD | = DC / (Relevant Factor from Table 601 in the consolidated factors workbook) |
Net benefits payable on age retirement: | ||
2 | ||
a) | NP | = P - PD |
b) | NDP | = DP |
