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 CARE 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 NITPS 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 normal pension age (NPA), as the early retirement provisions are not carried across to the receiving scheme. The member's accrued NITPS pension which is subject to the buy-out election 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 figures should be quoted for the purposes of Club Memorandum 4.7a (a) and (b), as the uplifted amounts will be taken into account for the purposes of determining the pension credit payable from the receiving scheme's NPA.
Uplifted pension in NITPS including revaluation at in-service rate to date of calculation, PENS Adj = PENS / ADJS
Uplifted pension in NITPS including revaluation at in-deferment rate to date of calculation, PEND Adj = PEND / ADJS
Where:
PENS is the pension in NITPS including revaluation at in-service rate to date of calculation (before adjustment)
PEND is the pension in NITPS 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.
For the purposes of paragraph 4.7a (c) of the Club Memorandum, the spouse/partner's pension proportion should be calculated as:
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 Calculating the transfer credit pension section above. The formula to be used is as set out in paragraph 4.28 of the Club Memorandum, i.e.
Transfer amount = [(MP x Fp) + (CWP x Fwid)] x FCAREadj
Where:
MP is the adjusted in-deferment pension PEND Adj
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, sex and normal pension age (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.
