Statement on Equalisation for GMPs AND the application of a ...

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greater, no further adjustment is required as the Statutory Minimum has been covered. Ifit is lower, the Statutory Minimum amount must be paid.As the Statutory Minimum allows for revaluation on the female GMP in the 60 tranche, theremaining elements of pension with revaluation at the excess rate are then paid from thelater NPA.Where scenario 1 is the maximum, the pension in the NPA 60 tranche at date of leavingincreases (as opposed to the difference being caused by different rates of revaluation).Accordingly, to avoid double counting, the Pre 97 pension payable at the later NPA(usually 65) is reduced by a corresponding amount. Note that the reduction: can be applied to all Pre 97 pension (including that accrued before 6 April 1978)except to the extent that it is an equivalent pension benefit (EPB); butcannot be applied to any Post 97 pension.B.5.5 Deferred pensioners – Male Statutory Minimum testFor males (or any female member who is treated as a male for part of her service) maleGMP is payable from age 65. An equivalent statutory minimum amount of PPFcompensation must therefore be payable from that age. This test has no impact on thecalculation of PPF compensation and has therefore not been considered further in thisdocument.B.5.6 Active and deferred pensioners over lowest NPA at Relevant TimeParagraphs 5 and 8 of Schedule 7 of the Pensions Act 2004 set out the treatment ofmembers who are over a scheme NPA at the Relevant Time. For such members theelement of postponed pension must be calculated in accordance with the scheme rules asthough the pension had come into payment immediately before the Assessment Date. Theinteraction of the statutory requirements and the scheme rules for the part of benefit dueas at the Relevant Time will be similar to that applying to pensioner members, which is setout in B.4 above.19
B.6 Actives – explanation of calculations at the Relevant TimeB.6.1 Typical timelineDate of leavingSchemeNPARelevant TimeFor active members a deferred pension is calculated at the Relevant Time and is usuallylinked to the member’s final pensionable earnings at that time. Since GMPs stoppedaccruing after 5 April 1997 and the Pensions Act 2004 only came into effect from 6 April2005, for an active member at the Relevant Time, the female GMP will always be thesame or greater than that applicable to an equivalent male member. See Part D.1 forfurther information on calculating male and female GMPs.B.6.2 Equalisation of Accrual Rate using Modified Method (2)The first check required is to see if any change is needed to the member’s total Pre 97pension at the Relevant Time to cover the requirement for equalising accrual rates, usingModified Method (2). Any member in active service on or after 6 April 2005 would have apost 5 April 1988 GMP accrual rate of 110ths at best 6 . For schemes entering anassessment period after 6 April 2005 the maximum post 5 April 1988 GMP will representan even smaller proportion of the member’s pension.The requirement to equalise accrual rates, using Modified Method (2) is therefore notexpected to increase the total Pre 97 pension at the Relevant Time for any activemembers since the scheme should have sufficient Pre 97 excess pension to cover anyincrease required to the GMP part of the pension.B.6.3 Statutory Minimum underpin check NPA 60A check is required to be carried out at the Relevant Time to ensure that there is sufficientPre 97 pension with a NPA of 60 to cover the female Statutory Minimum from age 60. Asset out in section B.5, the Statutory Minimum for the Pre 97 NPA 60 tranche of pension issimply the appropriate revalued GMP: for female members: all female GMP accrued between 6 April 1978 – 5 April 1997;and for male members: equivalent female GMP accrued between 17 May 1990 and 5April 1997.6 A member in active service aged 64 last birthday at 6 April 2005 would have been aged 37 last birthday whencontracting-out commenced on 6 April 1978. The post 88 GMP accrual rate would therefore be calculated byreference to a working life of 27 complete tax years for males (6 April 1978 to 5 April 2005) or 22 complete taxyears for females (6 April 1978 to 5 April 2000). For the purposes of equalisation for GMP we are concernedwith the more favourable GMP accrual rate applicable to females, giving: (20/100) x (1/22) = 1/110. Youngermembers would accrue post 88 GMP at a lower rate. (Eg members in active service age 63 and 62 last birthdayat 6 April 2005 accrue female GMP at 1/115 and 1/120 respectively.)20
Page 5 and 6: If you have any questions regarding
Page 8 and 9: A.4 Section 143 valuation requireme
Page 10 and 11: Combining information from several
Page 12 and 13: A.6 Schemes not included in the pil
Page 14 and 15: B.1 BackgroundB.1.1 Content of Part
Page 16 and 17: B.3 Statutory requirements for cont
Page 18 and 19: B.5 Interaction of the statutory re
Page 22 and 23: For actives, the application of the
Page 24 and 25: B.7.4 Typically male deferred pensi
Page 26 and 27: B.8.3 Back-paymentsWhere pensioner
Page 28 and 29: B.10 Back-paymentsB.10.1 Back payme
Page 30 and 31: (c) New Pensioners between the RT a
Page 32 and 33: C.1 Data requirementsFor members of
Page 34 and 35: C.3 AssumptionsThis section contain
Page 36 and 37: females joining the scheme after ag
Page 38 and 39: C.4 PPF Standard FormsThese forms c
Page 40 and 41: Form 1 - Active members at the Rele
Page 42 and 43: Generalised formula for male deferr
Page 44 and 45: Generalised formula for female defe
Page 46 and 47: 1 MGMP 65 = 0 if the member is aged
Page 48 and 49: Pensioner Form 3(b) - GMP only case
Page 50 and 51: GMP pensioners - use this section i
Page 52 and 53: Age at DOR = DOR - DOB (years and m
Page 54 and 55: PLUS applicable to pensioners who h
Page 56 and 57: Calculation of Accumulated Back-pay
Page 58 and 59: Calculation of uplift at Relevant T
Page 60 and 61: Uplift in Pension at Date of Retire
Page 62 and 63: C.5 Examples of theoretical calcula
Page 64 and 65: Active Example 1. Male active membe
Page 66 and 67: Form 1 - Active members at the Rele
Page 68 and 69: Statutory minimum test for NPA 60 t
Page 70 and 71:
Deferred pensioner examplesThe exam
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Modified Method (2): Opposite sex c
Page 74 and 75:
Adjustment to Pension revalued to t
Page 76 and 77:
Generalised formula for male deferr
Page 78 and 79:
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The revised NPA 65 tranche = total
Page 82 and 83:
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Adjustment to Pension revalued to t
Page 88 and 89:
Generalised formula for female defe
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Page 92 and 93:
Factors used in the form 2(a) for E
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Page 96 and 97:
eing a late retirement pensioner fo
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Pensioner NPA 60 trancheThe member
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Factors used in the Pensioner Form
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1 MGMP 65 = 0 if the member is aged
Page 104 and 105:
Factors used in the Male Deferred P
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Example 5 - Member with tranches of
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Pre 97 Pension at Date retired from
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Back-paymentsThe member is entitled
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Pensioner Form 3(a) - not GMP only
Page 116 and 117:
PLUS applicable to pensioners who h
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Pre 97 PPF compensation at Relevant
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Age at DOR = DOR - DOB (years and m
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Calculation of Accumulated Back-pay
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Pre 97 Pension at Date of LeavingPr
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2.8% and 3% are UK Guaranteed Minim
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Factors used in the Form 3(a) for E
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Factors used in the Form 3(a) for E
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Pensioner Example 6. Male pensioner
Page 162 and 163:
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Factors used in the Form 3(b) for E
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May use instead of standard calcula
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Back-payments Form 4(b) - GMP only
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Uplift at Relevant Time (before app
Page 172 and 173:
Calculation of Accumulated Back-pay
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D.1 Factors for calculating opposit
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D.2 Questionnaire to gather scheme
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Early retirement information15. Did
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Late retirement from either active
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NPAFGMP DOLFemale Deferred Pensione
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e.g. 65 MGMP DOL = male GMP at date
Page 186:
65 to RTEnter 1 if pension does not
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