Member Initiated Early Retirement may be payable to a firefighter who has left service with entitlement to a deferred pension and asks for it to be paid early straight away. An application can be made between age 55 and normal benefit age for a deferred pension, which is 65.
The first part of the calculation uses the basic formula, i.e.
annual pension = 1/60 x pensionable service x final pensionable pay
but then a reduction based on the Scheme Actuary’s guidance is applied. This reflects the fact that the pension will be paid for longer.
For example, a former firefighter asks for early payment at age 58, having completed 10 years’ pensionable service with final pensionable pay of £27,000. An actuarial factor of 0.690 would apply and the pension would be worked out as –
(1/60 x 10 x £27,000) x 0.690 = £3,105.00 a year
The table below sets out the percent reductions.
| FPS 2006 early retirement factors | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Age | 55 | 56 | 57 | 58 | 59 | 60 | 61 | 62 | 63 | 64 |
| Percentage reduction | 39.9% | 37.1% | 34.2% | 31% | 27.6% | 23.9% | 19.9% | 15.5% | 10.8% | 5.7% |
Part of the annual pension after reduction can be converted to provide a lump sum – see how much lump sum can I take?