Where such a loss involves loss of benefits in a defined benefit pension scheme or in pension scheme which offers a range off possible retirement ages, the services of an actuary may need to be employed to determine the quantum of loss in different circumstances in order that this either can be inserted in the Schedule of Loss for use in Court Proceedings or to form the basis of an informal settlement by negotiation.
Different methods of calculating the loss may be appropriate in different circumstances and it is important that expert advice is received concerning the determination of the appropriate figures. Complications include:
- Complex rates of pension increases in certain schemes
- The fact that even if the individual recovers from his injury, it may not be possible to rejoin a new pension scheme offering final salary type benefits of a similar format to the pension benefits being accrued before the loss event occurred.
- Different methods of calculating tax free cash entitlement in schemes
- Changes the rate of accrual of pension benefits in a scheme over time
- Different early/ill health retirement provisions in different schemes
- Complex definitions of Final Pensionable Pay when calculating pension benefits
- Cases where the scheme offered by an employer may have changed from final salary type to money purchase type over the period of loss.
Loss of Earnings” is an additional area which requires consideration and is linked in with the loss of pension rights. This is apparent where a pension loss has been determined as savings in not having to pay employee pension contributions need to be taken into account in the “Loss of Earnings” calculation.
Loss of State Pension Benefits may also need to be considered in some circumstances and it is important that his element of the loss is understood by the parties and the Court/Tribunal. As appropriate.