An active member of the 2015 Scheme may elect to purchase AP. This purchase may be made by a lump sum payment or by periodical payments.
Payment by lump sum is available to those who have been in a continuous period of pensionable service for at least 12 months. Only one lump sum payment is permitted for each scheme year.
Payment by periodical payments may be made over any period specified by the member, and may be expressed as a percentage of salary or as a regular fixed sum. The amount of any periodical payment cannot be less than any minimum amount determined by the scheme manager.
The amount of pension added for a scheme year needs to be adjusted to allow for any variations during the year in the level of contributions due to pay awards, members exiting active service, and the commencement of payments falling later than the start of the scheme year (in the case of members starting to buy added pension by periodic payments within 3 months of joining the scheme).
The member can choose to purchase 'self only AP', which increases the member's retirement benefits only, or 'all beneficiaries AP', which also provides 50% of the AP to the member's surviving dependants.
At any given time, the total amount of AP in a member's pension account cannot exceed the overall limit of added pension (£6,500 for any scheme year ending before 1 April 2016 and updated thereafter as set out in the scheme regulations). An AP election should therefore only be accepted where this total will not be exceeded. See Overall limit of added pension for more details.
Following receipt of a lump sum payment, an amount of added pension must be credited to the member's pension account for that scheme year. The amount credited should be calculated as follows:
AP credit = Lump sum payment / F
Where:
F is the factor for AP elections (see Tables x-406 and x-407)
Factors for calculating the AP to be credited to a member's account should be selected with reference to:
- the member's age (last birthday) at the start of the scheme year;
- whether dependant's benefits have been purchased; and
- the member's gender, if the election is to purchase 'self only AP'.
Where a member chooses to purchase AP by periodic payments, an amount of AP should be credited to the member's pension account. The amount credited should be calculated as follows:
AP credit = Periodic payment / F
Where:
Periodic payment is the nominal (£) amount of the payment made by the member (whether specified as a fixed sum or a percentage of pensionable earnings in the option notice)
F is the factor for AP elections (see Tables x-406 and x-407)
For members choosing periodic payments, the AP credit can be calculated and added to the member's account after each periodic payment or at the end of the scheme year. If the calculation is done at the end of the scheme year, add together all of the periodic payments throughout the year and apply the formula above.
Factors for calculating the AP to be credited to a member's account should be selected with reference to:
- the member's age (last birthday) at the start of the scheme year;
- whether dependant's benefits have been purchased; and
- the member's gender, if the election is to purchase 'self only AP'.
Once credited to a member's pension account, the AP increases in line with increases awarded to eligible pensions under the Pensions (Increase) Act (Northern Ireland) 1971 before coming into payment.
