Notional Service Purchase & Early Retirement

Gordon Gekko

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It would be great if someone could help with the following:

- A 42 year old public servant has 20 years of service today.

- He'll have 38 years of service at 60 (his retirement age).

- He purchases the missing notional service (2 years) by way of lump sum today.

- He ends up retiring at 55 (i.e. 13 years from now).

Will he be entitled to a lump sum of 99/80 and a pension of 33/80 (based on 33 years service)?

Or will he be entitled to a lump sum of 105/80 and a pension of 35/80 (based on 35 years service)?

The online material is full of caveats about entering into notional service purchase and then retiring early but it's difficult to tell whether that's just for people who pay over their career rather than by way of lump sum. Such people would obviously not end up purchasing the contracted amount of notional service as they'd retire before the payment period had finished. I'm wondering whether there's some other issue.

Many thanks.
 
The other issue is that you would effectively be receiving the 2 years purchased earlier than you agreed. You would either purchase by lump sum by reference to age 60 or 65 which assumes you get that benefit at either of those ages. If you purchased it to age 60 and get it at 55 you would be in receipt of it 5 years earlier than the hard working actuaries used to calculate the relevant % rate to charge you so they'd want payback. However if you purchase to age 60 and go at 55 cost neutral early retirement (CNER) kicks in so your pension and lump would be reduced by those reduction factors and an actuarial reduction wont apply to the purchased service as the CNER will take care of it.
 
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