The initial illustrations provided by the calculator are based on your assumed Normal Pension Age, whether this is influenced by the additional protections provided by the proposed pension agreement or by the link to the increase in State Pension Age.
The calculator displays an illustration of your accrued benefits under i) the current scheme arrangements; ii) the reformed scheme arrangements and iii) the sum of the current and reformed benefits to show an illustration of your total pension entitlement.
The calculator allows you to vary your retirement age, which allows you to see the impact on the illustrated benefits if you decide to retire at a different point in time, with estimated early and late retirement adjustment factors applied.
Current scheme benefits
The first calculation shows an illustration of benefits that will be accrued under the existing scheme. It uses your projected final salary at retirement to inform the calculation, based on your current accrual rate (i.e. 1/80th or 1/60th), and in terms of service is based on:
- For members with full current scheme protection, all estimated reckonable service accrued up to your current Normal Pension Age.
- For members with partial additional protection, all estimated reckonable service accrued up to a specific date determined by your proximity to retirement.
- For members whose membership of the current scheme is not protected, all estimated reckonable service accrued up to 31 March 2015.
Commutation: exchanging some of your pension for a bigger lump sum
The calculator allows you to exchange some of your pension for a tax free lump sum. This is called “commutation”. Current HMRC rules allow you to take up to 25% of your total fund value as a lump sum the calculator works out your total fund value and will allow you to look at various options so you can decide on the level of pension and lump sum that’s right for you. Move the slider between 0 and 25% to see the differences.
For each £1 of pension you exchange, you will receive £12 of lump sum.