The scheme allows members to purchase additional service by either:
- periodic contributions (an ongoing deduction of a percentage amount from the member’s salary, from the date the agreement commences up until age 60 or 65), or
- lump sum contribution (a single lump sum payment made at any point in the member’s career).
Eligible members may purchase service by reference to a retirement age of 60 or 65, as appropriate, provided that they will be short of 40 years’ service (or equivalent) at that age, and subject to the limits set out in Appendix 2 of Letter to Personnel Officers 12 February 1990.
The minimum lump sum contribution permitted is 10% of annual salary, except where the cost of purchasing the shortfall to 40 years is less than 10%.
Where periodic contributions cease prior to the purchase reference age (60 or 65), an adjustment will be made to the member’s purchased service to reflect the period over which contributions were actually made.
Where a member retires prior to the purchase reference age (age 60 or 65), the purchased service may be subject to actuarial reduction. This is in addition to an adjustment for early cessation of contributions and reflects the fact that pension benefits are being paid earlier than assumed in the purchase contract.
Purchase contributions are levied on salary only. Where a non-salary element (e.g. pensionable allowances) falls to be included in a member’s final pensionable remuneration, an additional purchase contribution will be due at retirement to cover the cost of the notional service arising from that non-salary element.