This section sets out how to calculate statutory (non-Club) Cash Equivalent Transfer Values (CETVs) from the 2006 Scheme.

Members of the 2006 scheme are generally entitled to take a transfer value to another pension arrangement. Where the new pension scheme is another scheme that does not participate in the Public Sector Transfer Club, the transfer will normally be effected on the non-Club terms set out in this note.

The Police Pension (Northern Ireland) Regulations 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.

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.
• If the member replies within the guarantee period but after implementation date, calculations on revised factors are compared with the original calculation and the approach most beneficial to member is used
• If the member replies outside of the guarantee period, the CETV is recalculated.

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

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 pension increases, as appropriate. Any Guaranteed Minimum Pensions (GMPs) should be increased, as appropriate.

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 65.

Transfer value = (CP x F_p) + (LS x F_ls) + (SUR x F_sur)

CP = member's pension

LS = member's lump sum

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

F_p = factor for member's pension - Table NA1_06, NA2_06 or NA3_06 from the consolidated workbook

F_ls = factor for member's lump sum - Table NA1_06, NA2_06 or NA3_06 from the consolidated workbook

F_sur = factor for survivor's pension - Table NA1_06, NA2_06 or NA3_06 from the consolidated workbook

Active members entitled to immediate benefits

For active members who are entitled to immediate benefits (such as those aged over 55), the transfer value should be calculated using the following formula:

Transfer value = (CP x F_p) + (SUR x F_sur) + LS

CP = member's pension

LS = member's lump sum

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

F_p = factor for member's pension - Table NF1_06 or NF2_06 from the consolidated workbook

F_sur = factor for survivor's pension - Table NF1_06 or NF2_06 from the consolidated workbook

If a pension debit member requests a statutory CETV, the quotation given should be based on the pension benefits after the debit.

The transfer value should be calculated in two stages:

• Firstly, a gross transfer value should be calculated as at the guarantee date ignoring the pension debit.
• Secondly, the pension debit should be revalued to the guarantee date and the value of the pension debit should then be calculated (i.e. the transfer value of a deferred pension of the same amount as the debit).

The results of both calculations should be passed to the receiving scheme. The transfer value paid is the net amount: the gross transfer value less the value of the pension debit.

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

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

TV_in = the value of the previous transfer in, calculated in accordance with the paragraphs 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 2006 scheme ignoring any service credit in respect of the previous transfer in. The member's pension (CP), the member's lump sum (LS) and the pension payable on the death of the member to their spouse or partner (SUR) should be recalculated using the actual service figure. Then TV_actser can be calculated using the formula in Calculation of the transfer value, as appropriate.

The value of transferred in service TV_in is usually the amount of the previous transfer value received by the police authority 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, TV_in is the transfer value that was received.
• Where the transfer in was a Club transfer, TV_in is the transfer value that was received.
• Where the transfer in was from the 1988 Scheme on the special conversion terms available from that scheme in certain circumstances, TV_in is the CETV that would otherwise have been available on the effective date of the transfer.
• Where the transfer in was from a bulk transfer into the 2006 Scheme, TV_in 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 2006 schemes in other parts of the UK.

If the underpin calculated above is greater than the transfer value calculated in Calculation of the transfer value, 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) may need to 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 Calculation of the transfer value section 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 paragraphs in the section titled Underpin in respect of previous transfer in above). In this circumstance, the member contribution underpin applies to the calculation of TV_actser (as defined in the section titled Underpin in respect of previous transfer in 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 2006 scheme. Factor table Table N_06 was 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.