If you are protected, your pension fund will check the pension you built up in the remedy period when you take your pension. They will compare the career average pension you built up with the pension you would have built up in the final salary scheme. If the final salary pension is higher, the difference is added to your pension. This is known as the underpin.
For most members, the comparison is simple. For other members, it is more complicated because certain parts of their pension are ignored in the underpin check. This means that the comparison is fair. The underpin check is not affected by any extra pension or reductions to your pension that could make it less likely that your pension will increase.
If you have any of the following, they will be included in the usual way when your pension fund works out your pension. They will be ignored in the underpin check:
- Extra pension you bought by paying additional pension contributions to boost your pension
- Extra pension your employer paid for
- Extra pension you bought by paying additional regular contributions or extra pension from added years you have bought
- Transfers of pension benefits from a scheme that is not a public service pension scheme
- Reduced contributions you paid because you choose to join the 50/50 section. The underpin check will be based on the pension you would have built up in the main section of the scheme.
- A pension debit – if your pension is shared after you divorce or your civil partnership is dissolved
- A scheme pays debit – if you ask your pension fund to pay an annual allowance tax charge on your behalf
- Additional voluntary contributions (AVCs).
If you paid additional pension contributions to buy back pension ‘lost’ when you were away from work in the remedy period, this will be included in the underpin check. The unpaid period you have paid for will also be used to work out the final salary pension used in the check.