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Calculating Benefits

If you were a member of the scheme before 1st April 2007 your benefits would consist of a pension and tax free lump sum.  The pension and lump sum calculations are based on your reckonable service and pensionable salary.  The method for calculating your pension is as follows:

 Pension = Service x Pensionable Salary
       80

As well as a lump sum of three times of the annual pension amount, you have the option to commute part of your pension to increase your lump sum up to 25% of your maximum fund value.  This means that you can reduce your annual pension figure to increase your lump sum.  Every £1 you deduct from your pension will increase your lump sum amount by £12.  The formula for calculating the maximum amount you can commute is as follows:

[Pension x 20] + [Lump sum x 20/12]
4.6667

If you became a member of the scheme on or after 1st April 2007 your benefits will consist of an annual pension based on reckonable service and pensionable salary. The method of calculation is as follows;

Pension = Service x Pensionable Salary
       60

Because of the higher accrual rate of your pension you do not automatically receive a lump sum payment.  However, as above, you have the option to commute part of your pension to claim a lump sum.  To calculate the maximum of commutation you would be allowed to take the following method would be used: 

Pension x 20
 4.6667

The resulting figure represents 25% of the fund value and is the maximum lump sum you may take. A member can choose the amount of lump sum they are paid up to the 25% maximum.

A Pensions Modeller is available on the Calculator section of this site, should you wish to investigate further how commutation of Pension would affect your retirement benefits.

Pension benefits may be liable to revision if the SPPA is notified of any changes to the information used to calculate your award. Any such revision will be regarded as a separate crystallisation of benefits and any additional benefits paid will be based on the standard LTA at the date of event.  This will be the later of the payable date or the date that the benefits are authorised.

Pensionable Salary

If you left service before 1st April 2007 your pensionable salary is:

    • the highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service. Reckonable service is those years and days that count towards your pension benefits.

If you were in service before 1st April 2007 but retire before 31st March 2009 your pensionable salary is the best of the following :

    • The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
    • The salaries for the last ten calendar years may be increased using index linking. The average of the best consecutive three years re-valued salaries in those ten calendar years is used.
    • The pensionable salary received in the last 12 months before the date of retirement.

If you retire after 31st March 2009 your pensionable salary is the better of the following:

    • The salaries for the last ten calendar years may be increased to current day value using index linking. The average of the best consecutive three years re-valued salaries in those ten calendar years is used.
    • The pensionable salary received in the last 12 months before the date of retirement.

The salary used to calculate your retirement benefits may be restricted if your salary is increased by more than 10% plus the standard increase during any financial year in your last three years of pensionable employment before retirement and your last year’s salary is used as the pensionable salary and your employer is not prepared to meet the cost of the difference in benefits. If your employer pays the additional contributions, you will receive benefits calculated on the unrestricted salary.

It is not possible to anticipate whether this provision might apply in any individual's case (and, if so, what the impact might be) in advance of retirement. It is only at retirement that we will be in a position to determine your pensionable salary period and assess your salary progression against standard pay awards during that period. If you are approaching retirement and you think that it is possible that your pensionable salary might be affected you should speak to your employer.

 

Link to Scottish Government Website