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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

£2,000 \times 1.05^5 + £500 = £3,053

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

£2,000 \times 1.05^5 + \left[ 500 – 1,000 \times \left( 1.05^5 – 1 \right) \right] = £2,776

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

£2,000 \times 1.05^5 + \left[ 500 - 2,000 \times \left( 1.05^5 – 1 \right) \right] = £2,553

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

£2,000 \times 1.05^5 = £2,553

For the normal retirement the calculation assumes Full Franking. So the pension at 65 is calculated as

£2,000 \times 1.05^5 + \left[ 500 – 2,000 \times \left( 1.05^5 – 1 \right) \right] = £2,553

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

£2,000 \times 1.05^5 = £2,553