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Commutation News
What is commutation?
Commutation is where part of the entitlement to a pension for life is exchanged for a lump sum payable on retirement. This requires a calculation of the current value of the entitlement given up. The calculation is done using actuarial advice. The advice is set out in tables containing “factors”. The level of the factors depends on age and life expectancy.
There are three main changes:
- the factors are increased
- the same factors are applied to men and women
- the factors vary with months of age rather than age next birthday
The new factors apply immediately and are backdated to 1 October 2007
You may have heard recently about the Government increasing the commutation 'multiplier' Please read the following two documents which gives a full explanation of the process.
JBB CIRCULAR NO : 44/2008 - CHANGE IN COMMUTATION AND EXCHANGE FACTORS
Government Actuary's Department - Commutation and Exchange of Lump Sum
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