Guidance

Life Commutation and recent changes to factors

Published 15 August 2019

Life Commutation refers to an option available to some AFPS 75 members to commute some of their pension benefits at retirement in exchange for a lump sum payment and once commuted can never be restored to the pension. This option is being phased out by the year 2020 and has been replaced by Resettlement Commutation.

The Life Commutation option is only available in respect of reckonable service prior to 6 April 1980 for members who joined on or before 31 March 1978. Your ability to commute your pension under the terms of Life Commutation has been affected by the Finance Act 2004 and a decision must be made before you leave the service. Resettlement Commutation and Life Commutation may not normally run concurrently, however if a member chooses Resettlement Commutation he/she is excluded from being considered under the Life Commutation Scheme until he/she reaches the age of 55.

In May 2010, the Government Actuary Department reviewed the Life Commutation factors and provided a revised set in a similar format to the existing factors with the calculations now carried out by reference to ‘age last birthday’ instead of ‘age nearest birthday’. These changes have now been implemented with an effective date of 20 May 2010 and a table showing the revised factors can be found at annex A.

Following the budget on 23 March 2011 the government announced that the new SCAPE (Superannuation Contributions Adjusted for Previous Experience) discount rate would be 3% per annum above Consumer Price Index. A further set of revised Life Commutation factors was then issued and have now been implemented with an effective date of 23 March 2011. A table showing the revised factors can be found at annex B.

SPVA Pensions Glasgow will now identify all awards where Life Commutation has been taken and processed after the effective dates mentioned above as these awards will be based on old factors, and we will retrospectively reassess using the appropriate revised Life Commutation factors. In due course, members will be notified in writing of the resulting changes to their awards, and Xafinity Paymaster will be instructed to make any adjustments necessary, for example to pay any arrears due or recover any overpaid sums by deduction from pension.

The department apologises for the technical problems it has been faced with and the unforeseen delays in implementing these revised factor changes.

Applications for Life Commutation can be made on forms AFPS Form 10 and AFPS Form 11.

Annex A

Life commutation rates for pensions which qualify for pension increases when the member reaches age 55 effective from 20 May 2010.

Age last birthday at discharge	Capital sum raised for each £1000 of retired pay/pension given up from exercise of the option by age 55	Annual reduction in retired pay/pension for each £1000 capital sum
40	653	105.8
41	670	110.6
42	689	116.3
43	708	123
44	728	131
45	749	140.8
46	771	153
47	794	168.6
48	818	189.1
49	842	217.4
50	868	258.7
51	895	325.1
52	924	449.7
53	954	782.5
54	984	1016

Annex B

Resettlement Commutation rates effective from 23 March 2011

Age last birthday at discharge	Capital sum raised for each £1000 of retired pay/pension given up from exercise of the option by age 55	Annual reduction in retired pay/pension for each £1000 capital sum
30	582.56	70.09
31	594.17	71.64
32	606.11	73.35
33	618.43	75.24
34	631.10	77.33
35	644.16	79.65
36	657.63	82.24
37	671.50	85.15
38	685.78	88.44
39	700.50	92.17
40	715.70	96.45
41	731.37	101.39
42	747.53	107.16
43	764.17	113.97
44	781.35	122.12
45	799.08	132.04
46	817.36	144.36
47	836.27	160.05
48	855.80	180.70
49	875.95	209.10
50	896.85	250.58
51	918.47	317.06
52	940.84	441.85
53	963.92	775.05
54	987.79	1012.52
55	1000	1000