Protections - Rule of 85
Printer-friendly versionExample: A member with full protection
A member reached age 62 on 31 March 2015 at which time he had 23 years’ service.
As he is over 60 and meets the Rule of 85 before 1 April 2016, his whole pension is protected and will not be reduced for early payment.
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Membership
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Benefit Calculation
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Amount
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|---|---|---|
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Before 1 April 2008 = 16 years
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Pension (16/80 x £18,000)
Automatic Lump Sum (3 x 16/80 x £18,000) |
£3,600
£10,800
|
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From 1 April 2008 and 31 March 2014 = 6 years
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Pension (6/60 x £18,000)
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£1,800
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| From 1 April 2014 = 1 year | CARE Pension | £367 |
The member’s total annual pension is £5,767 with an automatic lump sum of £10,800 (which can be increased by exchanging pension for a tax free cash lump sum – subject to the limits set by HMRC).
Example: A member with partial protection
A member reached age 60 on 31 March 2018 when he had 30 years’ service. His pension built up before 1 April 2008 will be paid unreduced, whereas his pension built up after this date will be partially reduced. His salary on retirement is £30,000.
The full level of reduction that would be applied to the post 31 March 2008 pension is 25%. However as his retirement date falls halfway into the period when protection is tapered off, these reduction factors only apply to one half of his benefits built up after 31 March 2008. So this part of his pension is reduced by 12.5%.
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Membership
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Benefit Calculation
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Amount
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|---|---|---|
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Before 1 April 2008 = 20 years
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Pension (20/80 x £30,000)
Automatic Lump Sum (3 x 20/80 x £30,000) |
£7,500
£22,500
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From 1 April 2008 and 31 March 2014 = 6 years
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Pension (6/60 x £30,000) reduced by 12.5%
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£2,625
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| From 1 April 2014 = 4 years | CARE Pension reduced by 12.5% | £2,143 |
The member's total pension is £12,268 with a lump sum of £22,500 (which can be increased by trading pension).