It’s always been a messy business, but now that many members will have both final salary and career average benefits, you’ll need to be prepared to get properly submerged in the technicalities of benefit accrual.
Because the full calculations can be so complex, we’ve given both full-fat and low-fat options for estimating pension input. Because even if you take the time and trouble to work through the numbers to your clients, you’ll usually only be able to position the result as an educated estimate. You’re unlikely to have access to enough data to do anything else for reasons which will become clear throughout the course of this guide.
A typical calculation for 20/21 is shown below together with some explanatory notes. In this example items highlighted in bold italics are final salary benefits whilst those highlighted in bold are career average benefits.