Reduced accrual members are members who have elected in the past to pay a lower contribution level in exchange for a lower accrual rate. Reduced accrual members still have the Past Service Percentage, which was adjusted to take into account the pension accrued to April 2016 on the lower accrual basis.
Service from April 2016 is then calculated as follows:
|
1/80th of Final Pensionable Earnings |
- |
1/80th of the Lower Earnings Limit |
x |
Post April 2016 Pensionable Service |
Example:
Andrew is a reduced accrual member retiring at age 65 on 5 April 2023, his Final Pensionable Earnings are £28,000, his Past Service Percentage is 25% and the Lower Earnings Limit (LEL) is £6,396. As Andrew's retirement date is in the 2023/24 tax year the LEL for this year is used. The LEL remains at £6,396 for the 2023/2024 tax year.
Andrew's pension accrued prior to April 20216 is:
|
Final Pensionable Earnings |
X |
Past Service Percentage |
= |
Pension accrued to April 2016 |
|
£28,000.00 |
25% |
£7,000.00 |
As Andrew is retiring on 5 April 2023, he has completed 7 years exactly as only complete months are included in the calculation so his pension accrued after April 2016 is:
|
1/80th of Final Pensionable Earnings |
- |
1/80th of the Lower Earnings Limit |
X |
Number of complete years and months |
= |
Pension accrued after April 2016 |
|
£350.00 |
£79.95 |
7 |
£1,890.35 |
So, Andrew's total pension is:
|
Pension accrued to April 2016 |
+ |
Pension accrued from April 2016 |
= |
Total pension |
|
£7,000.00 |
£1,890.35 |
£8,890.44 per year |
The total pension is rounded up so that it is divisible by 12.