Part III
10. Subject to the provisions of this Schedule, the value of liabilities in respect of pensjion rights shall be determined in accordance with the principles described as the “Projected Accrued Benefit Method” in the guidance entitled “Pension Fund Terminology” in section D of the Members' Handbook published in 1988 in London by the Institute of Actuaries.
11.—(1) Lump sum benefits which would be payable on the death after 30th September 1994 of a participant while accruing benefits in the transferor scheme shall be ignored to the extent that they would exceed the amount determined as a result of carrying out the calculation specified in sub-paragraph (2) of this paragraph.
(2) The calculation referred to in sub-paragraph (1) of this paragraph is:—
where
=
the lump sum benefit which would be payable on the death of the participant; and
=
the number of years of his participation up to 30th September 1994.
12. Service enhancements on death in service and ill-health retirement in accordance with the rules of the transferor scheme shall be ignored.
13. Without prejudice to paragraph 14(b) of this Schedule, increases in pay which are agreed after 30th September 1994 but back-dated to that date or before shall be ignored for the purpose of determining any amount which depends on the level of pay at 30th September 1994.
14. The valuation shall make use of the following actuarial assumptions:—
(a)the valuation rate of interest shall be 8.25% per annum in respect of pension rights allocated to the 1994 Pensioners “A” Section or the 1994 Pensioners “B” Section of the Railways Pension Scheme and 8.5% per annum in respect of pension rights allocated to the Open Section;
(b)pay shall be taken to be increased from its level immediately before 1st October 1994 by 6.5% per annum, with the first such increase on 1st April 1995, before allowing for increases due to promotion or seniority, except where an increase in pay which applies in respect of a period starting before 1st January 1995 is agreed and notified to the trustee of the transferor scheme before 1st October 1994, and in such a case pay shall be taken to be increased (before allowing for increases due to promotion or seniority) in the period up to the date agreed under the agreement as being the date as at which pay shall be reviewed annually or (if later) up to 1st January 1996 in accordance with the agreement so notified, and thereafter by 6.5% per annum, with the first increase of 6.5% on 1st January 1996 or such earlier date as may be agreed under the agreement as being the date as at which pay shall be reviewed annually;
(c)the basic state pension shall be assumed to be increased at 5% per annum;
(d)pensions in payment shall be taken to increase at 4.5% per annum except that any part in payment after the age of 65 (or, in the event of the death of the participant or person previously participating, in payment after such death) and attributable to the member’s rights to guaranteed minimum pension shall, to the extent that such rights accrued after 6th April 1988, be taken to increase at 3% per annum and shall otherwise be taken not to increase;
(e)deferred benefits and such pensions and benefits assumed to be awarded to members of the transferor scheme assumed to withdraw voluntarily in the future shall be assumed to increase during deferment at 4.5% per annum;
(f)pay shall be assumed to increase as a result of promotion and seniority in accordance with the scales given in columns 1 and 2 of Table 1 set out in Part IV of this Schedule;
(g)the probability of a participant dying while accruing benefits in the transferor scheme shall be assumed to be in accordance with the rates given in columns 3 and 4 of the said Table 1;
(h)the probability of a participant withdrawing voluntarily and being awarded deferred benefits while accruing benefits in the transferor scheme shall be assumed to be in accordance with the rates given in columns 5 and 6 of the said Table 1;
(i)the probability of a participant retiring on ill-health grounds while accruing benefits in the transferor scheme shall be assumed to be in accordance with the rates given in columns 7 and 8 of the said Table 1;
(j)the probability of a participant retiring early voluntarily with an immediate pension while accruing benefits in the transferor scheme shall be assumed to be in accordance with the rates given in columns 9 and 10 of the said Table 1. The factor to be applied to service is given in columns 1 and 2 of Table 2 set out in Part IV of this Schedule except that allowance shall be made for those members entitled under the scheme to more generous early retirement benefits than normal;
(k)all retirements other than early retirements on grounds of ill-health or voluntarily shall be assumed to take place on attaining age 65 in the case of males and age 60 in the case of females, or immediately in the case of females who are, immediately before 1st October 1994, over 60;
(l)deferred benefits shall be assumed to come into payment on attaining age 60, or immediately for those persons who immediately before 1st October 1994 are over 60, and such benefits assumed to be awarded to members of the transferor scheme assumed to withdraw voluntarily in the future shall be assumed to come into payment on attaining age 60 except that, in each case, allowance shall be made for a member’s right to draw benefits on favourable terms before age 60;
(m)the mortality of pensioners who retired or are assumed to retire on grounds other than ill-health and of those who withdrew or withdraw voluntarily with deferred benefits either before or after the pension comes into payment shall be based on the PA(90) Tables for Pensioners published in 1979 in London by the Institute of Actuaries with the following age adjustments:—
(i)expected mortality of those receiving pensions immediately before 1st October 1994:
| Males | none |
| Females | +1 year |
(ii)expected mortality of those with deferred benefits immediately before 1st October 1994:
| Males | -1 year |
| Females | none |
(iii)expected mortality of those accruing benefits immediately before 1st October 1994 after subsequent retirement or voluntary withdrawal:
| Males | -1 year |
| Females | none; |
(n)the probability of survival of pensioners who retired or are assumed to retire on grounds of ill-health, to any age after retirement shall be determined from Table 3 set out in Part IV of this Schedule;
(o)the proportions of members of the transferor scheme who shall be assumed to be married at death to a spouse entitled to an adult dependant’s pension are shown in Table 4 set out in Part IV of this Schedule together with the age difference to be assumed between the former member and spouse. Allowance shall be made for the likelihood of children receiving pensions. Pensions to other dependants of those dying in the future shall be ignored;
(p)the mortality of women in receipt of an adult dependant’s pension under the transferor scheme and of widows assumed to be awarded such a pension in the future shall be based on the WA 80 Table included in “Standard Tables of Mortality: the “80” Series” published in 1992 in London by the Institute of Actuaries(1) as applying in the base year 1980 with the following age adjustments for improvements in mortality since 1980—
(i)expected mortality of those year receiving pensions | -1 year |
(ii)expected mortality of widows of those receiving pensions | -1 year |
(iii)expected mortality of widows of those with deferred benefits immediately before 1st October 1994 | -2 years |
(iv)expected mortality of widows of those accruing benefits immediately before 1st October 1994. | -2 years |
Widowers shall be assumed to experience mortality at the rates set out in the PA(90) Tables for Pensioners referred to in sub-paragraph (m) above, with the following age adjustments:
(i) men receiving pensions and widowers of those receiving pensions | + 1 year |
(ii) widowers of those with deferred benefits or those accruing benefits immediately before 1st October 1994. | none |
Once commenced, an adult dependant’s pension to a widow or widower shall be assumed to be continued until he or she is assumed to die;
(q)for the propose of valuing contributions referred to in paragraph 5(a) or (b) of this Schedule, it shall be assumed that there will be sufficient new participants to keep the total pay of participants at the level at which the total pay is immediately before 1st October 1994 subject to the provisions of sub-paragraph (b) of this paragraph.
ISBN 0 901066 22 2.