Members of the 1988 scheme are generally entitled to take a transfer value to another pension arrangement. Where the new pension scheme is another scheme that participates in the Public Sector Transfer Club, the transfer will normally be effected on Club terms. Please refer to the Club Memorandum for full details on the methodology for Club transfers.

The Royal Ulster Constabulary Pensions Regulations 1988 define the circumstances under which a member is entitled to take a transfer value. Members with over three months of service would generally be entitled to a transfer value. Members with less than two years of qualifying service would normally be entitled to a refund of contributions. Members with between three months and two years of service would generally have a choice between a transfer value and a refund of contributions.

Calculation of the transfer value

The formulae are provided in the Club Memorandum. Factor tables to be used in the calculations are:

• For members not entitled to immediate benefits (including deferred members and active members entitled to deferred benefits from deferred pension age 60), Table 2 - Club factors for Males/Females with a Normal Pension Age of 60 from the Club Memorandum.
• For active members entitled to immediate benefits, Table F1 (table reference 205C) of the consolidated workbook.

Alerting members to the statutory CETV transfer route

In some circumstances a statutory CETV (non-Club) transfer may produce a higher service credit for the member than a Club transfer. On responding to a request for a Club transfer value, the police pension administrator should suggest to the administrator of the receiving scheme that they alert the member to the possibility that the statutory CETV route could, in some circumstances, result in a higher service credit. It would then be for the member to consider acting on the information by requesting a statutory CETV quotation from the 1988 scheme. Such cases are expected to be infrequent and are most likely to arise when an individual has taken a large drop in salary when moving.

The relevant date for calculating a transfer value is the 'guarantee date' as defined in The Occupational Pensions Schemes (Transfer Values) Regulations 1996 (as amended), i.e. it must be within 3 months (or exceptionally 6 months) of the date of the member's application.

A transfer value should be guaranteed for three months from the guarantee date. If a request to pay the transfer value is made within three months of the guarantee date, it will not be necessary to recalculate the transfer value.

The benefits to be valued for serving police officers are those that would be payable if the member had left service on the date of the calculation - either deferred benefits or the payment of immediate benefits. For a member with less than two years of service the benefits valued are the deferred benefits that would be payable if there were not a two-year qualifying period for deferred benefits.

The benefits to be valued for a deferred member seeking a transfer out of the scheme should include revaluation to the guarantee date. The accrued pension benefits should be calculated at the last day of service, and then increased in line with Pensions Increase (Review) Orders.

Previous Club Memoranda included a table of adjustment (AMC) factor to allow for changes in market conditions. AMC factors no longer apply to Club transfers from 1 January 2012; however, some schemes may find it easier to retain an AMC table but based on factors of 1.00 for all yields and ages. Similarly, Club transfers that were calculated before 1 March 2017 were adjusted to take account of GMPs and National Insurance modification. The tables of factors effective from that date no longer include any factors for GMP or National Insurance modification adjustments. As with the AMC factors, some schemes may find it easier to retain GMP and National Insurance modification factors, in which the factor will be 0.00 in all cases.

For members with a deferred pension age of 60 and for active members who are entitled to immediate benefits, the formula for calculating a statutory CETV is given below. In addition, if the member has received a transfer in from another scheme, then an underpin applies to the statutory CETV, as described in the section titled Underpin in respect of previous transfer in below.

Following the requirement to equalise GMPs, the calculation methodology does not contain a GMP adjustment for members reaching State Pension age after 6 April 2016.

When the CETV Factors change, we understand that the usual transitional arrangements in place for the scheme apply i.e. transfer quotes are calculated using factors effective at that time. Therefore, where calculations are carried out before the implementation date of the revised CETV factors, we would expect the following to apply:

• If the member replies within the guarantee period and before the implementation date, the original quote is honoured including the adjustment applied to GMP.
• If the member replies within the guarantee period but after the implementation date, the approach most beneficial to member are used.
• If the member replies outside of the guarantee period, the CETV is recalculated. No adjustment is made in respect of GMP.

Any current cases where a CETV is required for a member reaching State Pension age before 6 April 2016 should be referred to GAD.

Members not entitled to immediate benefits

The formulae below should be used for those members who are not entitled to immediate benefits. This includes deferred and active members who are entitled to deferred benefits from age 60.

(CP x F_p) + (SUR x F_sur)

CP = member's pension

SUR = pension payable on the death of the member to their spouse or partner

F_p = factor for member's pension - Tables NA1 and NA2 from the consolidated workbook

F_sur = factor for survivor's pension - Tables NA1 and NA2 from the consolidated workbook

Active members entitled to immediate benefits

The formulae below should be used for those members entitled to immediate benefits.

(CP x F_p) + (SUR x F_sur)

CP = member's pension

SUR = pension payable on the death of the member to their spouse or partner

F_p = factor for member's pension -Tables NF1 and NF2 from the consolidated workbook

F_sur = factor for survivor's pension -Tables NF1 and NF2 from the consolidated workbook.

Members entitled to deferred benefits at age 50

1988 scheme members with more than 25 years of service but less than 30 years have, in effect, a deferred pension age of 50. For such members, the transfer value should be calculated using the following formula.

Transfer Value = (CP x F_p) + (SUR x F_sur) + Adj B

Where:

CP = member's basic pension, excluding pension increases (which are accounted for in Adjustment B below)

SUR = pension payable on the death of the member to their spouse or civil partner

Adj B = adjustment B, see below

F_p = factor for member's pension - Table D1 or D2 from the consolidated workbook

F_sur = factor for survivor's pension - Table D1 or D2 from the consolidated workbook

Adjustment B only applies to deferred pensioners with accrued pension increases. These increases will not be payable until age 55. Adjustment B is calculated as follows:

Adj B = (PI x F_P-A)

Where:

PI = pension increases accrued but not yet payable (NB. the monetary amount and not the percentage increase)

F_P-A = factor from Table M from the consolidated workbook

Deferred members entitled to immediate benefits

Deferred members may be entitled to immediate benefits. In these cases the statutory (non-Club) CETV should be calculated using the formula and factors provided to calculate the cash equivalent for pensioner members as shown for Cash equivalents on divorce: Members already in receipt of benefits in the Pension sharing on divorce section of this guidance including the use of Adjustment B where relevant.

Adjustment B applies to deferred members entitled to immediate benefits who are aged under 55. If these members took their pension immediately then at age 55 the pension would increase up to the level it would have been if it had been index-linked since leaving service.

The member's pension (CP) should be the rate of pension which would come into payment if the deferred member chose to take their benefits at the calculation date. For members aged 55 and above, this will include pension increases. For members under age 55, this will exclude pension increases. (Allowance is made for these increases in Adjustment B.)

The survivor's pension (SUR) should be the rate at which a widow(er)'s pension would be payable if the member had died immediately before the calculation date. This will include pension increases.

If the member has received a transfer in of benefits from another scheme, then an underpin applies to the CETV. The underpin is calculated using the following formula:

Underpin = TV_ActSer + TV_in

Where:

TV_ActSer = the transfer value based on actual service, calculated in accordance with below

TV_in = the value of the previous transfer in, calculated in accordance with below

The transfer value based on actual service (TV_ActSer) is calculated as for a normal transfer value, but the value of the benefits is based on reckonable service in the 1988 scheme ignoring any service credit in respect of the previous transfer in. The member's pension (CP) and the pension payable on the death of the member to their spouse or civil partner (SUR) should be recalculated using the actual service figure. Similarly, the GMP amounts will be the GMP accrued during active service in the 1988 scheme and should exclude any transferred-in GMP. Then TV_ActSer can be calculated as described above in the Statutory CETV transfers out or Members entitled to deferred benefits at age 50 sections above as appropriate.

The value of transferred in service TV_in is usually the amount of the previous transfer value received but there are some exceptions. The value to use for different types of transfer in are as follows:

• Where the transfer in was a statutory CETV (i.e. non-Club) transfer, TVin is the transfer value that was received.
• Where the transfer in was a Club transfer, TVin is the transfer value that was received.
• Where the transfer in was from a bulk transfer into the 1988 scheme, TVin is the CETV that would have been available from the member's previous scheme at the date of transfer.

If more than one transfer in has been received, TV_in should be the sum of the specified figures for all the transfers received. There is no need to perform the underpin check in respect of transfers in from the corresponding 1988 schemes in other parts of the UK.

If the underpin calculated is greater than the transfer value calculated in the Statutory CETV transfers out or Members entitled to deferred benefits at age 50 sections above, then the transfer value should be increased so that it equals the underpin.

The value of post-1997 contracted-out rights (known as section 9(2B) rights) must be shown separately on the transfer value statement.

If the underpin described above applies, then the value of section 9(2B) rights is the sum of:

• the transfer value based on actual service on and after 6 April 1997
• the part of any transfer value received which related to section 9(2B) rights.

If the transfer value calculated in the Statutory CETV transfers out or Members entitled to deferred benefits at age 50 sections above is less than the member's aggregate pension contributions (without interest) then the transfer value should be increased so that it equals the aggregate contributions.

If the member has previously received a transfer in of benefits from another scheme, then the underpin in relation to that transfer in applies (as described in the Underpin in respect of previous transfer in section above). In this circumstance, the member contribution underpin applies to the calculations of TV_ActSer (as defined in Underpin in respect of previous transfer in section above), and not to the sum of TV_ActSer + TV_in.

Previous versions of this guidance note included calculation methodology to allow administrators to value the accrued GMP, typically for use in cases where the value of the GMP was to be quoted separately or liability for the GMP was to be retained within the Police pension schemes. Factor in tables NA1 and NA2 were provided for this purpose. We understand that there is no longer a requirement to provide the value of the GMP on transfer values and therefore we have not included the calculation methodology or factors in this guidance. Please contact GAD if a GMP value is required for a particular case.

If a pension debit member requests a statutory CETV, the quotation given should make allowance for the debit. The following section applies where the pension debit arises from either a tax charge or a pension sharing order on divorce.

If the pension debit member has a deferred pension age of 60 at the guarantee date their benefits should be calculated as at the guarantee date, initially ignoring the pension debit. The pension debit should then be revalued to the guarantee date and deducted from the member's benefits. The transfer value calculation (described in Statutory CETV transfers out or Members entitled to deferred benefits at age 50 above) can then be applied to the member's net benefits (i.e. the benefits after deduction of the debit).

If the pension debit member is entitled to immediate benefits at the guarantee date their benefits should be calculated as at the guarantee date, initially ignoring the pension debit. The pension debit should then be calculated assuming that the member retires at the guarantee date, using the relevant formula from Calculation of the pension debit in the Pension sharing on divorce section of this guidance, and deducted from the member's benefits. The transfer value calculation (described in Cash equivalents on divorce: Members already in receipt of benefits in the Pension sharing on divorce section of this guidance) can then be applied to the member's net benefits (i.e. the benefits after deduction of the debit). The Adjustment B term in this last calculation would need to be calculated using the accrued PI amount in respect of the pension net of the debit.

If the member's deferred pension age was 50 at the time of the pension sharing order and is still age 50 at the guarantee date the transfer value calculation needs to be done in two stages:

• Firstly, a gross transfer value should be calculated using the member's benefits at the guarantee date ignoring the pension debit, as described in Members entitled to deferred benefits at age 50 section and Underpin in respect of previous transfer in section above. The Adjustment B term would need to be calculated using the accrued PI amount in respect of the gross pension.
• Secondly:
  • if the member was deferred at the time of the initial pension sharing order, the calculation described in Members entitled to deferred benefits at age 50 section should be applied to the debit as calculated in Pension debit for deferred pensioner in the pension sharing on divorce section. The accrued PI used to calculate the Adjustment B term needs to be calculated as the pension debit multiplied by the accrued PI percentage since date of exit.
  • if the member is active at the guarantee date, the calculation described in Members entitled to deferred benefits at age 50 section should be applied to the debit as calculated in Pension debit for an active member in the pension sharing on divorce section. The accrued PI used to calculate the Adjustment B term needs to be calculated as the pension debit multiplied by the accrued PI percentage since the transfer date.
  • if the member was active at the time of the initial pension sharing order but is now deferred, an estimate is required of the debit that will apply on retirement at age 50. Start with the debit as calculated in Pension debit for an active member in the Pension sharing on divorce section of this guidance. Then apply the formulae in that section, assuming that the retirement age is 50 and that pension increases that are in the future are at 2% per year (the pension increase assumption is required to calculate the PI_trd→ret and PI_dol→ret terms used in the formula). This estimated debit at retirement can be used in the formula in Members entitled to deferred benefits at age 50 section above. The accrued PI used to calculate the Adjustment B term needs to be calculated as the adjusted pension debit (after application of the formulae above) multiplied by the accrued PI percentage since date of exit from active service.

The survivor debit (SURDEB) should be revalued to the guarantee date using pension increase uprating factors.

The transfer value to quote is the gross transfer value less the value of the pension debit (i.e. the result of the first stage minus the result of the second stage).

Where appropriate, the underpins described in the Underpin in respect of previous transfer in section and the Member contribution underpin to CETV section apply to the value of the member's benefits ignoring the pension debit.

If the member's deferred pension age has changed from 60 at the time of the pension sharing order or tax charge to 50 by the time of the CETV request, the transfer value calculation needs to be done in three stages:

1. A gross transfer value should be calculated using the member's benefits at the guarantee date ignoring the pension debit, as described in Members entitled to deferred benefits at age 50 above.
2. The value of the pension debit should be calculated as the transfer value of a deferred pension of the same amount as the debit, but payable from age 60 using the formula in Members not entitled to immediate benefits in the Statutory CETV transfers out section.
3. The transfer value to quote is the gross transfer value less the value of the pension debit (i.e. the result from stage 1 minus the result from stage 2).