Pension - AA Breach / DB Scheme Pays

Hello - I have a case where we have an AA breach and are going down the route of using the Scheme Pays arrangement. I haven't ever dealt with one of these cases, so apologies in advance if I'm asking a really obvious question.

I'm trying to get clarification from the scheme regarding the impact that this could have on the member's FS benefits . The RL tech guide says that 'under a FS scheme , the scheme calculates the reduction in benefits. This reduction has to be just and reasonable'. However, despite a couple of requests, the scheme admins just say that 'the benefits would be adjusted by an AA debit to the member's lump sum and pension, increased in line with the Pensions (Increase) Act up until the member retires'.

Am I just not getting it - I was hoping that they could give me something in % or £ terms, something more precise or structured?

A further complication is that they send all their correspondence direct to the member. I'm naturally wary of pressing them for a more specific response when my knowledge in this area is shaky and running the risk of their reply making me look foolish in front of the member. In short, I don't feel confident about what I'm doing and I need a bit of help - please !

Many thanks Maddy x


  • One typical approach is:

    The scheme commutes the pension (or pension plus cash if it's a cash in addition) needed to fund the AA charge.
    That pension 'debit' is revalued to NRA along with the rest of the pension benefits.
    The DB pension in payment at NRA is reduced by the debit(s).

    But there are other ways. The scheme administrator should be able to tell you the monetary amount of the pension debit they've taken to cover the AA charge at the date they took it.

    Benjamin Fabi 
  • MaddyMaddy Member

    Thank you so much

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