Awarding additional pension
Contents
Employer's Discretion
Under Regulation 31, you have the discretionary power to award additional pension to:
- An active member
- A member who was active and left due to redundancy or business efficiency (up to 6 months after their leave date)
The additional pension limit is £7,316 for the year 2021/22, increasing each year by Consumer Prices Index (CPI), and you must meet the cost of awarding this pension.
You must have a policy on awarding additional pension.
The additional pension would be payable unreduced on redundancy or efficiency retirement and would therefore incur a cost, payable by you, if the member left on these grounds.
You may have a policy to allow the member to forgo any enhanced redundancy payment and use this amount to provide a pension. Please note that you would incur the cost for the payment of this additional pension, as the benefits are paid unreduced.
Please contact us for further details should you wish to award additional pension.
Employer Funded Additional Pension
Under Regulation 16, the member or the employer may purchase additional pension up to the limit of £7,316 (for the year 2021/22) whilst the member is active in the scheme.
Please note that, by virtue of Regulation 30(7), when a member receives payment of their pension following termination of their employment on the grounds of redundancy or business efficiency:
- Any additional pension bought by the employer or the member under regulation 16 is subject to actuarial reduction.
- Any additional pension bought by the employer under regulation 31 is not subject to actuarial reduction, so will incur an additional employer cost.
Further details of purchasing additional pension under Regulation 16 can be found under the section Additional Pension Contributions (APCs).