Actives Basis: Legislation
GMP: Revaluation Type to SPA
Select from the drop-down list how to revalue the GMPs for members who leave active service before SPA. The options are:
- None
- Fixed
- Limited
- S148
If Fixed Rate revaluations are selected SuperVal will use the
following rates to revalue the pension (based on member’s year of exit):
| Leaving Service Date | Revaluation Rate |
|---|---|
| Post-06/04/2012 | 4.75% |
| 06/04/2007–05/04/2012 | 4.00% |
| 06/04/2002–05/04/2007 | 4.50% |
| 06/04/1997–05/04/2002 | 6.25% |
| 06/04/1993–05/04/1997 | 7.00% |
| 06/04/1988–05/04/1993 | 7.50% |
| Pre-06/04/1988 | 8.50% |
If Limited is selected, then please note LRPs will not be calculated.
This option is intended to give the user an indication of the difference
between Fixed and Limited revaluations.
If S148 increases are selected then enter the appropriate rate of
increase in the field Section 148 orders.
Section 148 Orders
This is the rate at which GMPs for members in active service and for leavers with revaluations in line with S148 orders will be increased.
Select from the drop-down list the Global Financial Parameter that contains the rate applicable. Once selected, the current value of the Global Financial Parameter is shown to the right of this field.
To add a new Global Financial Parameter use the Edit Scheme Financials button at the bottom of this tab.
Revalue to NRA<SPA
Check this box if NRA is less than SPA and the GMP is revalued at a different rate to NRA. If NRA is equal to SPA then leave this field unchecked and the statutory revaluation will be correctly applied.
If checked, SuperVal will apply the Revaluation Rate to NRA< SPA to the GMP up to NRA. Then at SPA it will make an addition for all the statutory revaluations on the GMP not yet in payment (subject to the Franking Code ).
Revaluation Rate to NRA<SPA
This is the rate at which GMP benefits will be revalued to NRA if the Revalue to NRA<SPA box has been checked. At SPA, SuperVal will revalue the GMP using the Revaluation Type to SPA selected. Any shortfall in revaluations (when compared to the GMP at NRA) will be added to the PUP at SPA. The addition at SPA would be subject to the Franking Code.
Select from the drop-down list the Global Financial Parameter that contains the rate applicable. Once selected the current value of the Global Financial Parameter is shown to the right of this field.
To add a new Global Financial Parameter use the Edit Scheme Financials button at the bottom of this Tab.
An example to illustrate this is set out below:
Suppose you have a male member who is currently 30 who will retire at age 60. All of his pension is revalued in deferment at 3.5% pa. The user has checked the Revalue to NRA<SPA box and has selected a Global Financial Parameter with a value of 3.5% for this field. The GMP revaluation type is fixed. The pension accrued in the 2nd year is £1,000 of which £500 is GMP. Once in payment, the pension will increase at 4% per annum.
The deferred PUP payable at age 60, after leaving in the second year, will be calculated as
(Note that GMP is revalued using complete years in the same way as the excess over GMP.)
The addition at SPA for GMP revaluations not yet in payment, assuming no franking, is calculated as
(Note that complete tax years are used for the revaluation of the GMP to SPA.)
The deferred PUP at SPA will be calculated as
Franking Code for NRA<SPA
For Actives and Deferred Members, there are five choices for Franking of GMPs for members retiring before SPA. For Pensioners only the first three options are available. Select from the drop-down list which of these to apply. The options are:
- None
- Partial Franking
- Full Franking
- Maximum Franking
- No Anti Franking Guarantee
An example to illustrate how these different options work is set out below:
Suppose you have a male member retiring at 60 with a pension as follows:
- Pension = £2,000
- GMP at 60 = £1,000 (included in above figure)
- GMP at 65 = £1,500
GMP revaluations between 60 and 65 are therefore £500 (£1,500 less £1,000).
Once in payment, the pension will increase at 5% per annum.
The additional pension at SPA for the GMP revaluations between 60 and 65 under each of the options are as follows:
None
All of the revaluations on the GMP are added to the pension at SPA.
So, the pension at 65 is calculated as
Partial Franking
Revaluations on the GMP between retirement and SPA, less scheme increases granted on the GMP, are added to the pension at SPA.
So, the pension at 65 is calculated as
Note that the difference between the GMP revaluations and scheme increases on the GMP can not be used to reduce the pension payable ie the item in square brackets cannot be negative.
Full Franking
All of the increases on the pension between retirement and SPA are franked against revaluation on the GMP.
So, the pension at 65 is calculated as
Note that the difference between the GMP revaluations and scheme increases on the whole pension can not be used to reduce the pension payable i.e. the item in square brackets cannot be negative.
Maximum
This option differs from Full Franking only if you have an early retirement decrement in your basis.
For the early retirements the calculation assumes there is No Anti-Franking guarantee. So the pension at 65 is calculated as
For the normal retirement the calculation assumes Full Franking. So the pension at 65 is calculated as
Note that the difference between the GMP revaluations and scheme increases on the whole pension can not be used to reduce the pension payable i.e. the item in square brackets cannot be negative.
No Anti Franking Guarantee
No antifranking guarantee is made at SPA.
So, the pension at 65 is calculated as
Offset Slices
Offset Slice Number
This field is used to identify the date at which the GMP accrual ceased. Enter the Slice Number on which the Service Finish Date should be used as the date at which GMP accrual has ceased. All of the benefits arising from the Slice entered and higher Slice Numbers will be assumed to have an underlying GMP benefit. (Including those Slices where only added years and pension data item benefits are specified.)
For example, if there are four Slices specified as follows:
| slice | specification |
|---|---|
| 1 | Future Service, i.e. VDATE to LDATE |
| 2 | Service from 6/4/1997 (or DJF if later) to VDATE |
| 3 | Service from a benefit/category change date (or DJF if later) to 6/4/1997 |
| 4 | Service from DJF to the benefit/category change date |
The Offset Slice Number entered is 3, meaning that the benefits under Slices 3 and 4 will have GMP underlying them. The benefits under Slices 1 and 2 will not have GMP benefits.
Where the Scheme is Contracted-In and/or GMP benefits are payable on top
of the benefits entered on the Slices, enter a value of 17.
Please note that this field is used in a Non PPF Capped Valuation Run to
determine which parts of the pension receive pension increases. Pension
arising from Slices before the Offset Slice number and higher will be
deemed to have no pension increases for PPF Valuation purposes. Pension
arising from a Slice number lower than the Offset Slice will be deemed
to be increasing pension in payment for PPF Valuation purposes.
Statutory GMP Inc to NRA>SPA
This field determines the pension increases that are used to increase the GMP between SPA and NRA for retirements after SPA.
Check the box to increase GMPs by 1/7% per week, then by the assumed statutory GMP increases from SPA to NRA. The statutory GMP increases are hard-coded in SuperVal and are assumed to be 0% annually for Pre-1988 GMP and 3% annually for Post-1988 GMP.
Leave the box unchecked to increase the GMPs by 1/7% per week, then by the user specified pension escalation in payment from SPA to NRA. The pension increases in payment are those specified for Pre-1988 GMP and Post-1988 GMP respectively on the Financial tab.
SuperVal only applies the Late Retirement uplift after the member completes seven weeks post state pension age (60 for women and 65 for men) as stated in the legislation.
Treat GMPs as Zero
Check this box to ignore all GMP benefits. Leave unchecked if you want to value GMP benefits.
Public Sector GMPs
Check this box to value public sector style treatment of GMPs. Leave this box unchecked to value private sector style treatment of GMPs.
This field is only available to some users.
IR Maximum Parameters: Rules
Select from the drop-down list which of the pre-A-Day Inland Revenue Limits to apply. The limits will be applied to the retirement pensions calculated by SuperVal in the Benefit Slices for the corresponding periods of service. The options are:
- Ignore
- Pre-1987 Rules
- Pre-1987 or Post-1989, depending on DJF
- Post-1987 or Post-1989, depending on DJF
- Post-1989 Rules
- Pre-1987, Post-1987 or Post-1989, depending on DJF
The IR maximum pension will be calculated according to the option chosen. The Date Joined Company (DJS) is used in the calculation of the maximum.
The Post-A-Day Tax Simplification Rules are not calculated by SuperVal. However, there is an option to use either a percentage or multiple data item for the cash benefit percentage which could be manipulated to approximate this benefit.
Cap Increase Rate
Inland Revenue Limits for joiners Post-31/05/1989 are calculated using the Earnings Cap. This is the rate at which the Earnings Cap will increase to date of exit.
Select from the drop-down list the Global Financial Parameter that contains the rate applicable. Once selected, the current value of the Global Financial Parameter is shown to the right of this field.
To add a new Global Financial Parameter use the Edit Scheme Financials button at the bottom of this Tab.
The Earnings Cap, to which this rate is applied, is taken from the Factor File. The Factor that contains the Earnings Cap is called Max. Please note that the calculations determine the total benefit amount for Post-1989 joiners using the Earnings Cap figure but do not restrict the actual salary used in the calculations to the Earnings Cap. In order to limit the salary used to the Earnings Cap set a Salary Maximum on the Salaries Tab.
IR Maximum Parameters: Salary
Select from the drop-down list which of the salaries defined on the Salaries Tab should be used to calculate the Inland Revenue maximum pension.
IR Maximum Parameters: Application
Select from the drop-down list how to apply the Inland Revenue Maximum Rules to the retirement and cash benefits. The options are:
- Limit Future First
- Proportionate
Under Limit Future First the future service benefit will be restricted
by the Inland Revenue Limit Maximum first.
Under Proportionate any Inland Revenue Limit will apply
proportionately to past and future service benefits.
Consider the following example:
| Prior to application | Limit Future First | Proportionate | |
|---|---|---|---|
| Total Service Pension | £12,000 | ||
| Future Service Pension | £7,000 | £5,000 | £5,833 |
| Past Service Pension | £5,000 | £5,000 | £4,167 |
| IR Maximum Pension | £10,000 | £10,000 | £10,000 |
Edit Scheme Financials
Clicking the Edit Scheme Financials button takes you to the Scheme Financials menu.
Here you will be able to see a list of all the Financials that are currently defined. Double-click on the tree to see an expanded list of all financial assumptions that are defined.
Click the Add/Edit Financials to change the value of one of the assumptions.
Save As
Click the Save As button to save with a new parameter description.
Save
Clicking on the Save button allows you to save the entries.
Quit
Clicking on the Quit button allows you to exit without saving any of your changes.
In some of the screens you will be asked to confirm if you want to exit Ignoring all changes. If you click Yes, the file will be closed without saving any changes. If you click No you will be returned to your original screen.