12.—(1) A credited teacher is entitled to lump sum compensation and to annual compensation.
(2) Subject to regulation 16 (termination payments), the amount of the lump sum compensation is A-B, where—
A is the retirement lump sum to which he would be entitled on the hypothesis specified in paragraph (4), and
B is the assumed retirement lump sum.
(3) Subject to paragraph (6) and to regulations 17 to 19, the rate of the annual compensation is C-D, where—
C is the annual rate of the retirement pension to which he would be entitled on the hypothesis specified in paragraph (4), and
D is the annual rate of the assumed retirement pension.
(4) The hypothesis is that—
(a)all his effective service counts as reckonable service; and
(b)any actuarial reduction required by regulation E5(14) or E6(10) of the Superannuation Regulations is disregarded.
(5) The assumed retirement lump sum and the assumed retirement pension are—
(a)where all his effective service counts as reckonable service, those to which he is entitled disregarding any actuarial reduction required by regulation E5(14) or E6(10) of the Superannuation Regulations; and
(b)in any other case, those to which he would have been entitled if all his effective service had counted as reckonable service disregarding any actuarial reduction required by regulation E5(14) or E6(10) of the Superannuation Regulations.
(a)an occupational pension is being paid in respect of service before the material date; and
(b)the aggregate of his effective service, any period in respect of which he is entitled to the occupational pension, and the credited period would exceed 40 years; and
(c)the aggregate of the annual rates for the time being of the occupational pension and of the annual compensation under this regulation would exceed the relevant amount defined in paragraph (8);
the rate of the annual compensation under this regulation is to be reduced so that the relevant amount is not exceeded.
(7) For the purposes of paragraph (6)—
(a)the annual rate at any time of the annual compensation under this regulation and of any other official pension within the meaning of the 1971 Act are their annual rates as increased under that Act; and
(b)the annual rate at any time of an occupational pension which is not such an official pension is its annual rate as increased under any contract, scheme or other arrangement.
(8) The relevant amount mentioned in paragraph (6) is E+ F, where—
E is the amount specified in paragraph (9), and
F is any amount by which E would have been increased if it had been the annual rate of an official pension within the meaning of the 1971 Act beginning, and first qualifying for increases under that Act, on the day after the material date.
(9) The amount constituting E is—
G is his average salary, and
H is the length in years of his effective service.
(10) For the purposes of this regulation an occupational pension is a pension by way of periodical payments, other than a retirement pension under the Superannuation Regulations or annual compensation payable under regulation 7, which is payable under an occupational pension scheme; and for the purposes of paragraph (9) regulation E31 of the Superannuation Regulations (average salary) is in every case to be construed as if the former employment were pensionable employment.