How retirement benefits are calculated

Contents:

Pension

Lump-sum

• If you were a scheme member (existing member) before 1 April 2007, your benefits are made up of an annual pension and a lump sum that are calculated using your pensionable service and average salary.
• If you became a scheme member (new entrant) on or after 1 April 2007, you will receive only an annual pension although you may give up part of your pension in favour of a lump sum.
• There are transitional arrangements for existing scheme members who were out of service prior to 1 April 2007 and who re-enter the scheme after that date.
• For further information about average salary see the Average salary fact sheet.

Pension

• Existing member – the pension is 1/80th of the average salary for each year of pensionable service. The pension is taxable.
• New entrant – the pension is 1/60th of the average salary for each year of pensionable service. The pension is taxable.

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Lump sum

• Existing member – the tax-free lump sum is 3/80th of the average salary for each year of pensionable service. If you have pensionable service on or after 1 April 2007 you may increase this lump sum by commuting £1 of pension, which will increase your lump sum by £12.
• New entrant – there is no automatic lump sum, however, to get a lump sum you can commute £1 of pension for £12 of lump sum.
• You can commute up to 25% of your total pension benefits.

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