Members over Normal Pension Age, or who already receive a survivor or ill-health pension, will normally receive 100% of the benefit under the scheme’s rules.
However members under Normal Pension Age, including those already receiving pension, are normally entitled to only 90% of the level of accrued benefit under the rules.
Members subjected to the 90% restriction will also have their compensation limited to a stated maximum permitted rate.
This cap on compensation levels depends on age and length of service (it is lower for younger people because the compensation will be paid for longer).
From 1 April 2018, the cap for a member at age 65 is £39,006 (or £35,105 with the 90% factor applied).
From 6 April 2017, the Long Service Cap came into effect for members who have 21 or more years’ service in their scheme.
For these members the cap is increased by three per cent for each full year of pensionable service above 20 years, up to a maximum of double the standard cap.
The indexation of the compensation into the future will also have an impact on scheme members. The compensation attributed to service before April 1997 does not attract inflation increases.
Compensation attributed to service since April 1997 increases in line with the consumer prices index (CPI), subject to a maximum increase of 2.5%.
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