This section contains up-to-date technical guidance on the actuarial factors currently used to determine a member’s entitlement under FAS. The factors have been provided for information purposes only and should help Trustees and Administrators understand how FAS assistance is calculated. They will be reviewed from time to time and may be changed without notice. Specific factors may be accessed sing the links below:
Bridging Factors
Some pension scheme rules incorporate benefit structures in which a component of pension is payable for a short period or, equivalently, a deduction starts being made some time after the pension becomes payable. These are referred to as “bridging pensions”.
When a member of a pension scheme has a bridging pension payable which has been smoothed by the scheme then a bridging factor must be applied based on the number of years that the bridge would be payable for.
The adjustment affects expected pension and therefore the assistance payable in all circumstances to a member and to a member’s eligible dependants.
The factors were first introduced under the summer regulations of 10 July 2009 and were then updated when the FAS basis was revised. The updated factors came into force on 21 April 2010. Once a factor has been used to calculate annual assistance, that factor will always be used if the member’s assistance is reassessed, even if at date of reassessment new factors are in force.
The bridging factors are set out in two tables via the links below:
Bridging Factors from 21 April 2010 onwards
For members who were assessed for annual payments from 10 July 2009 until 20 April 2010, please view the following table:
Bridging Factors from 10 July 2009 to 20 April 2010
The bridging factors will be reviewed from time to time and may be changed without notice.
Commutation Factors
Eligible members of schemes that have transferred assets to government may be entitled to commute some of their assistance for a lump sum with effect from the time that the assistance becomes payable.
The maximum commutation lump sum that a member will be able to take is set out in Regulation 17D of the Financial Assistance Scheme Regulations 2005.
The amount of lump sum payable per £1 of assistance given up is set out in the table below:
Commutation Factors
The commutation factors will be reviewed from time to time and may be changed without notice.
Early Retirement Factors
FAS qualifying members may apply to get early access to their assistance up to five years before their FAS Normal Retirement Age (NRA) if they are unable to work due to ill health and are likely to continue to be unable to work until their NRA.
Paragraph 5 of Schedule 2A to the Financial Assistance Scheme Regulations 2005 specifies that an actuarial adjustment will be applied to assistance payable under that Schedule that is paid early for this reason. The adjustment will be made by applying an early retirement factor.
The adjustment affects assistance payable to a member and the assistance paid to the member’s eligible dependants on the death of the member after taking an early access pension.
The factors were first introduced under the summer regulations of 10 July 2009 and were then updated when the FAS basis was revised. The updated factors came into force on 21 April 2010. Once a factor has been used to calculate annual assistance, that factor will always be used if the member’s assistance is reassessed, even if at date of reassessment new factors are in force.
The early retirement factors are set out in two tables via the links below:
Early Retirement Factors from 21 April 2010 onwards
For members who were assessed for annual payments from 10 July 2009 until 20 April 2010, please view the following table:
Early Retirement Factors from 10 July 2009 to 20 April 2010
The early retirement factors will be reviewed from time to time and may be changed without notice.
Notional Annuity Factors
Notional annuity factors are used to calculate a proxy annuity that could have been afforded by the scheme if it had purchased an annuity rather than paying a lump sum to or in respect of the member during wind-up.
The non-indexed notional annuity factors are used for lump sums relating to Pre 97 service. The indexed notional annuity factors are used for lump sums relating to Post 97 service.
Notional annuity factors are determined by multiplying a central annuity factor dependent on the individual’s age by the relevant market value adjustment. The market value adjustment applied is dependant on whether the member is a pensioner or non-pensioner.
The factors applied are based on the date of payment of the lump sum.
The central annuity factors are set out in tables via the links below:
Joint Life Central Annuity Factors for lump sums paid from 21 April 2010
Single Life Central Annuity Factors for lump sums paid from 21 April 2010
For payments made prior to 21 April 2010, only joint life factors are applied. Please view the following table:
Joint Life Central Annuity Factors for lump sums paid before 21 April 2010
The notional annuity factors will be reviewed from time to time and may be changed without notice.
A market value adjustment (MVA) is applied to the central annuity factor. For a pensioner member or survivor the post-retirement MVA is applied. For a non-pensioner member the post-retirement and pre-retirement MVAs are applied. Different MVAs are applied to payments in relation to increasing and non-increasing elements. The MVAs are set out in the tables via the links below:
MVAs for lump sums paid before 21 April 2010
MVAs for lump sums paid after 21 April 2010
Tranching Factors
All FAS assistance is payable from a single FAS Normal Retirement Age (NRA). When a member of a pension scheme has a tranche of benefit that is payable by the scheme at an age other than FAS NRA a tranching factor must be applied to the tranche.
Paragraph 4B of Schedule 2 to the Financial Assistance Scheme Regulations 2005 covers the actuarial adjustments that must be made to tranches of benefit to ensure that they are payable from FAS NRA.
The factors were first introduced under the summer regulations of 10 July 2009 and were then updated when the FAS basis was revised. The updated factors came into force on 21 April 2010. Once a factor has been used to calculate annual assistance, that factor will always be used if the member’s assistance is reassessed, even if at date of reassessment new factors are in force.
The tranching factors are set out in two tables via the links below:
Tranching Factors for 21 April 2010 onwards
For members who were assessed for annual payments from 10 July 2009 until 20 April 2010, please view the following table:
Tranching Factors from 10 July 2009 to 20 April 2010
The tranching factors will be reviewed from time to time and may be changed without notice.