PART 5Pension accounts
CHAPTER 2Calculation of adjustments
Actuarial reduction on early payment of pension (early payment reduction)41
1
An actuarial reduction (“early payment reduction”) is applied when calculating the annual rate of pension payable to—
a
an active member who becomes a pensioner member of this scheme before reaching normal pension age under this scheme;
b
a deferred member who becomes a pensioner member of this scheme before reaching the member’s state pension age; or
c
a person who becomes a pension credit member of this scheme before reaching the member’s state pension age.
2
An early payment reduction is not applied when calculating—
a
the annual rate of ill-health pension under this scheme; or
b
the annual rate of full retirement pension which comes into payment early on grounds of permanent medical unfitness.
3
An early payment reduction is calculated by reference to the following—
a
for an active member who claims payment of a full retirement pension before reaching normal pension age, normal pension age under this scheme with the reduction having regard to actuarial neutrality compared to the present value of a pension payable at normal pension age, with future increases between the date of that member’s early retirement and normal pension age being in line with increases under the index adjustment;
b
for a deferred or pension credit member of this scheme who claims payment of a full retirement pension before reaching the member’s state pension age, the member’s state pension age with the reduction having regard to actuarial neutrality compared to the present value of a pension payable at state pension age with future increases between the date of that member’s early retirement and state pension age being in line with increases under PIA 1971.
4
In these Regulations—
“actuarial reduction” means a reduction determined by the scheme manager in accordance with actuarial guidance; and
“early payment reduction” means an actuarial reduction that is applied under paragraph (1).