The calculations below are appropriate for members subject to benefit reduction due to AA charges retiring on grounds of ill-health.
The factors used for the calculations are in Table 602 in the consolidated factors workbook.
The appropriate factor will depend on the member's age 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 ill-health are described below for both the 1995 and 2008 Sections.
The pension and lump sum debits should be applied to the (enhanced) main scheme benefits. The debits should be applied to benefits before member options are exercised, e.g. commutation.
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.
Amounts at retirement | Notation |
Total DC pot | DC |
Main Scheme Ill-health Pension | IHP |
Main Scheme Ill-health Lump Sum (1995 Section only) | IHLS |
Dependant's Pension | DP |
Member Pension debit | PD |
Member Lump Sum debit (1995 Section only) | LSD |
Net Main Scheme Ill-health Pension | NIHP |
Net Main Scheme Ill-health Lump Sum (1995 Section only) | NIHLS |
Net Dependant's Pension | NDP |
1995 Section
Step | Item | Calculation |
1 | PD | = DC / (Relevant Factor from Table 602 in the consolidated factors workbook) |
2 | LSD | = 3 x PD |
Net Benefits Payable on ill-health retirement: | ||
3 | ||
a) | NIHRP | = IHP - PD |
b) | NIHLS | = IHLS - LSD |
c) | NDP | = DP |
2008 Section (including Choice members)
Step | Item | Calculation |
1 | PD | = DC / (Relevant Factor from Table 602 in the consolidated factors workbook) |
Net Benefits Payable on ill-health retirement: | ||
2 | ||
a) | NIHRP | = IHRP - PD |
b) | NDP | = DP |
