For those members who have not made a buy-out election, the CARE Club transfer out payment should be calculated using the approach set out in the Club Memorandum.
For those members who are above their normal pension age (NPA) at the guarantee date for the transfer, the Club transfer out payment should be calculated in line with the approach set out in the Club Memorandum. This includes those members who have made a buy-out election, as any benefit from taking up this option is lost if the member does not claim their benefits before NPA.
If a member has made a buy-out election the transfer credit pension and the CARE Club transfer amount should include an allowance for this, in line with the Club Memorandum. The approach to adopt is set out below, as the Club Memorandum does not set out explicit details on the approach to use.
Some members may have revoked, or been taken to revoke, their buy-out election and as a result part of their pension may be subject to the buy-out election and part of their pension may not. For these members their pension which is subject to the buy-out election needs to be uplifted, whereas no adjustment should be applied to the part of their pension that is not subject to the buy-out election.
The Club Memorandum sets out the information the TPS will need to send to the receiving scheme.
The receiving scheme will convert the value of the member's entitlement into additional pension payable from the receiving scheme's NPA, as the early retirement provisions are not carried across to the receiving scheme. The member's accrued TPS pension needs to be uplifted to convert this into an amount payable from NPA.
Set out below is the method that should be used to calculate the uplifted pension amounts using in-service revaluation and deferred revaluation between date of leaving and date of calculation. The adjusted and unadjusted figures should be quoted. The uplifted amounts will be taken into account for the purposes of determining the pension credit payable from the receiving scheme's NPA. The unadjusted figures may be quoted to explain how the member's pension has been uplifted to allow for their buy-out election.
Uplifted pension in TPS (career average section) including revaluation at in-service rate to date of calculation, PENS Adj = PENS / ADJS
and
Uplifted pension in career average section of the TPS (career average section) including revaluation at in-deferment rate to date of calculation, PEND Adj = PEND / ADJS
Where
PENS is the pension in TPS (career average section) including revaluation at in-service rate to date of calculation (before adjustment)
PEND is the pension in TPS (career average section) including revaluation at in-deferment rate to date of calculation (before adjustment)
ADJS = 1 - 0.03 x N
Where:
N is the minimum of:
- The number of years for which the standard reduction has been bought out; and
- NPA minus the member's age (in years and complete months) at the guarantee date
The spouse/partner's pension proportion should be calculated as:
Spouse/Partner's pension proportion = 37.5% x PENS / PENS adj
The CARE Club transfer amount should be calculated using PEND Adj as determined in the sub section Calculating the transfer credit pension. The formula to be used is as set out in the Club Memorandum i.e.
CARE Club transfer amount = [(MP x Fp) + (CWP x Fwid)] x FCAREadj
Where:
MP = PEND Adj (the adjusted in-deferment pension)
CWP is the pension payable to a surviving dependant on the member's death (regardless of partnered status) including in-deferment revaluation to the date of calculation.
Fp is the factor as taken from Tables 3 to 8 of the Club Memorandum as applicable for the member's age and NPA at date of calculation.
Fwid is the factor as taken from Tables 3 to 8 of the Club Memorandum as above.
FCAREadj is the factor as taken from Table 9 of the Club Memorandum for CARE revaluation (CPI + 1.6% pa)
To identify the amount attributable to the early retirement option determine the above with
MP = PEND
And take the difference between the two amounts calculated. This is the amount to be provided in accordance with the Club Memorandum.
