What is reduction factor in SAP PA-PF - Pension Schemes?

SAP Term: reduction factor

• Component: PA-PF

• Component Name: Pension Schemes

• Description: A factor used to calculate the current pension value when an employee retires earlier or leaves the pension fund.

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  Key Concepts: 
  Reduction factor is a term used in the SAP PA-PF Pension Schemes component. It is a numerical value that is used to calculate the amount of pension that an employee will receive. The reduction factor is based on the employee's age and length of service. 
  
  How to use it: 
  The reduction factor is used to calculate the amount of pension that an employee will receive. The reduction factor is calculated by taking into account the employee's age and length of service. The higher the reduction factor, the lower the amount of pension that an employee will receive. 
  
  Tips & Tricks: 
  When calculating the reduction factor, it is important to take into account any changes in the employee's age or length of service. This will ensure that the correct reduction factor is applied and that the employee receives the correct amount of pension. 
  
  Related Information: 
  The SAP PA-PF Pension Schemes component also includes other terms such as pensionable salary, pensionable age, and pensionable service. It is important to understand these terms in order to accurately calculate the reduction factor and ensure that employees receive the correct amount of pension.