Firefighters Pension Scheme 1992 Examples of Club Transfer Calculations

Transcription

1 Firefighters Pension Scheme 1992 Examples of Club Transfer Calculations Date: 30 December 2011

2 Firefighters Pension Scheme 1992 Examples of Club Transfer Calculations Table of Contents 1 Introduction Scope of this guidance note Questions about this guidance Notes on this guidance Revised calculations Club transfers out Example Calculations Club transfer out Tables of factors... 9 Issued 30 December

3 1 Introduction 1.1 Scope of this guidance note This note relates to the Firefighters Pension Scheme introduced in It sets out the general method for assessing: Public Sector Transfer Club transfer values The Actuarial Factors in this note come into effect from 1 January 2012, in accordance with the letter issued by the Cabinet Office on 2 December This note supersedes previous guidance issued by the Government Actuary s Department The letter from the Cabinet Office describes the transitional arrangements for the new factors References in this guidance to The Firefighters Pension Scheme (England) may be taken to include their equivalents in Scotland, Wales and Northern Ireland. Changes to the previous factors The format of the factors applying from 1 January 2012 is substantively the same as the factors that were previously used. There are, however, some changes as follows: (i).the factors have been calculated in line with the HMT guidance on calculating cash equivalent transfer values published on 26 October (ii) AMCs are no longer required. A table with AMCs of 1.00 has been included as this may be easier for implementation. (iii) the proportion of the factor that is applied to GMP accrued after 5 th April 1988 has changed. Issued 30 December

4 1.2 Questions about this guidance If you have any questions about how to use this guidance, in the first instance administrators should consult published information or the Firefighter Pensions pages at: If this does not help, administrators may contact the relevant Fire Pensions Team, by e- mail or writing to: Firefighters' Pensions Team WPP Division Department for Communities and Local Government Zone 5/F6 Eland House Bressenden Place London SW1E 5DU Scottish Public Pensions Agency 7 Tweedside Park Tweedbank Galashiels TD1 3TE Fire and Rescue Services Branch Welsh Assembly Government Merthyr Tydfil Office Rhydycar Merthyr Tydfil CF48 1UZ Department for Health, Social Services and Public Safety Fire Division Castle Buildings Stormont Belfast BT4 3SS The Fire Pensions Teams will seek input from the Scheme Actuary if necessary. Issued 30 December

5 2 Note on this guidance 2.1 This guidance note supersedes the guidance noted 30 September 2010 but should be used in conjunction with the guidance issued on the 30 June 2009 (previous guidance). This note has been updated to allow for the changes listed in section Issued 30 December

6 3 Revised calculations 3.1 Club transfers out Replacing the formula provided in section of the previous guidance, the calculation of the Club transfer value is given by (CP +APB pen ) F p + (SUR +APB sur ) F sur NI x F ni (PRE GMP + G post88 POST GMP) F gmp CP APB pen SUR APB sur member s pension additional pension from CPD contributions or LSI pension payable on the death of the member to their spouse or partner additional pension payable on the death of the member to their spouse or partner from CPD contributions or LSI NI annual amount that will be deducted at State pensionable age due to NI modification PRE GMP annual GMP accrued before POST GMP annual GMP accrued from F p F sur F ni F gmp G post88 factor for member s pension Table A1 or A2 factor for survivor s pension Table A1 or A2 factor for NI modification Table A1 or A2 factor for GMP saving (column titled Deduction for GMP of 1 pa ) Table A1 or A2 conversion factor applied to GMP deduction, for GMP amount in respect of service after 5 April Please see note in Table A1 or A2 Issued 30 December

7 4 Example Calculation This section provides an example of the calculations described by this note. Figures in this example calculation are rounded to a suitable level of accuracy. Where a figure is shown as an intermediate step in the calculation, subsequent steps will use this rounded figure as written on the page. It is also perfectly acceptable to perform this calculation on a computer spreadsheet, such as MS Excel. In this case the figures calculated in the intermediate steps will usually not be rounded, so the final answer may be slightly different to that shown in these examples. The difference will not be significant and both methods are valid. However, when performing calculations for paper based calculations, the figures calculated as intermediate steps should not be rounded to a lower level of accuracy than used in this example. Issued 30 December

8 4.1 Club transfer out The following information is needed for this calculation: A. Member s date of birth 25 May 1971 B. Last date of service 10 Aug 2006 C. Guarantee date 11 Aug 2006 D. Member s age last birthday as at calculation date 35 E. Marital status Not required F. Gender Male G. Final Pensionable Pay 22,000 H. Reckonable service for deferred pension 3 years 122 days I. Pre-88 GMP 100 J. Post-88 GMP 300 K. Additional pension from CPD contributions or LSI 0 L. NI modification 0 Formula From 3.1.1, the formula to calculate the Club transfer value is: (CP + APB pen ) F p + (SUR +APB sur ) F sur - NI x F ni (PRE GMP + (G post88 POST GMP)) F gmp Inputs CP = (1 60) x 22,000 x (3 + ( )) = 1, pa SUR = 0.5 x 1, = pa NI = 0.00; so F ni will not be required PRE GMP = 100 POST GMP = 300 F p = 9.34 (from Table A1 Gross Pension of 1 pa column) F sur = 2.20 (from Table A1 Surviving Partner s Pension of 1 pa column) G Post88 = 15% (from note 2 in table A1) F GMP = 3.26 (from Table A1 Deduction for GMP of 1 pa column) Calculation Substituting these values into the formula we get: TV = (1, x 9.34) + ( x 2.20) ( * 300) * 3.26 = 11, , = 12, Therefore the Transfer Value out is 12, Issued 30 December

9 5 Tables of factors Table A1: Transfer value factors for deferred benefits payable from 60 (males) Table A2: Transfer value factors for deferred benefits payable from 60 (females) Table D2: Adjustment for market conditions Issued 30 December

10 Table A1: Transfer value factors for deferred benefits payable from 60 - Males Age last birthday at relevant date Gross Pension of 1 pa Surviving Partner's Pension of 1 pa 1 Deduction for GMP of 1 pa 2 Deduction for NI Modification of 1 pa GMP valuation factor The factor for survivor s pension is the same for married and unmarried members. 2 When calculating the deduction for GMP, the factor given should be applied to the sum of the GMP amount in respect of service up to 5 April 1988 and 15% of the GMP amount in repect to service after that date. 3 When calculating the value of the protected rights for males, the factor given should be applied to the annual amount of the GMP accrued in respect of service up to 5 April 1988, plus 1.25 times the annual amount of the GMP accrued in respect of service after that date. Issued 30 December

11 Table A2: Transfer value factors for deferred benefits payable from 60 - females Age last birthday at relevant date Gross Pension of 1 pa Surviving Partner's Pension of 1 pa 1 Deduction for GMP of 1 pa 2 Deduction for NI Modification of 1 pa GMP valuation factor The factor for survivor s pension is the same for married and unmarried members. 2 When calculating the deduction for GMP, the factor given should be applied to the sum of the GMP amount in respect of service up to 5 April 1988 and 15% of the GMP amount in repect to service after that date. 3 When calculating the value of the protected rights for females, the factor given should be applied to the annual amount of the GMP accrued in respect of service up to 5 April 1988, plus 1.30 times the annual amount of the GMP accrued in respect of service after that date. Issued 30 December

12 Table D2: Adjustment for market conditions Males and Females Age last birthday at relevant date Yield on index-linked stocks at relevant date 1 0% 1% 2% 3% 4% The AMC table is not required but is included for ease of implementing the new factors. Issued 30 December