Glossary

Glossary

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A - Z

Glossary of Local Government Pension Scheme terms.

Active member
An active member of a pension scheme who is building up pensionable service via contributions paid to the pension scheme on a regular basis.

Actuarial reduction
An actuarial reduction is applied to a member's accrued pension benefits. The reduction is to offset any additional cost arising from early payment of their retirement benefits.

Actuary
An actuary is a professionally qualified, independent person, whose role is to value pension funds in order to ensure that there is enough money in the fund to guarantee the pensions (and associated payments) of its scheme members.

Additional Regular Contributions (ARCs)
Scheme members may purchase extra LGPS pension, in 'steps' of £250, up to a maximum of £5000 extra annual pension, by making additional regular contributions (ARCs). Members pay extra on top of their standard LGPS contribution in order to purchase this additional annual pension. ARCs differ to AVCs in that they purchase additional annual pension directly within the LGPS itself, rather than contributing to a 'pot' held by an external AVC provider (Prudential, Clerical Medical etc). Contact us if you would like a quote.

Administering Authority
In this instance the 'Administering Authority' is Buckinghamshire County Council. An administering authority is responsible, amongst other things, for maintaining member records, dealing with member queries/requests, investment of the fund and paying your LGPS pension.

Admitted Body
An 'Admitted Body' is an employer who is carrying out work that is very similar in nature to a public service (i.e. similar to the services a local authority provides; housing associations, specialist schools, care in the community etc). The employer, once its application to become an Admitted Body has been approved, enters into a contractual arrangement with the administering authority in order that its employees may join the LGPS.

Annual benefit statement
An annual process which results in the production of a benefit calculation for every single member/employment held on Buckinghamshire County Council’s pension database (excluding existing pensioners, employees who have left the scheme with no benefit entitlements and/or deceased members). The estimate is accurate as of the last complete financial year or, in the case of deferred statements, the member's date of leaving the authority. Due to the vast amount of effort required to produce these statements, a more recent date is just not feasible.

Additional Voluntary Contributions (AVCs)
These are paid by a scheme member in order to provide for a complementary retirement benefit. The contributions are paid into a 'pot' held by an external AVC provider, from which retirement benefits shall eventually be paid. As of April 2006, the previous 15% maximum contribution rate has been replaced with a new personal annual allowance limit of up to 50% of your pensionable earnings. We have arrangements with two AVC providers; Clerical Medical and Prudential.

B

Beneficiary
A person who will receive some form of benefit payment from the scheme once certain events come to pass e.g. a spouse's pension payable on the death of an existing scheme member.

Benefits agency
An independent body which administers the State Pension Scheme. Any worker in the UK can become entitled to a State Pension, whereas only people who have worked in Local Government (and paid into the LGPS) are entitled to an LGPS pension. The Benefits Agency administers the State Pension Scheme, Local Authorities (eg Buckinghamshire County Council, Bedfordshire County Council, etc) are only responsible for the LGPS. See also Department for Work and Pensions.

Benefits forecast/estimate
While it is not possible for us to make a guaranteed prediction of your benefits at retirement age, we can produce estimates which will give you a rough idea of what your pension is likely to be. The nearer you are to retirement age, the more accurate your estimate is likely to be. Generally speaking, we provide estimates (on request) showing benefits at the age of 60 or 65, although you can stipulate an alternative date if you wish.

Best value
Legislation bought in by the Government in an attempt to make local authorities more accountable for their actions and expenditure. By conducting reviews of their individual departments, local authorities are expected to streamline services and ensure that the public they serve are receiving good 'value for money'.

C

CEP (Contributions Equivalent Premium)
When a scheme member leaves the LGPS and opts for a refund of their contributions, a sum of money (the CEP) is payable to the DWP to cover the cost of reinstating the member into S2P (State Second Pension), formerly SERPS (State Earnings Related Pension Scheme).

Certificate of protection
Certificates of Protection of Pension Benefits were intended to protect, for a period of up to 10 years, pension rights accrued by a scheme member who had been forced to accept a lower rate of pay or whose pay had been restricted.

Civil partnership
A civil partnership is a relationship between two people of the same sex (‘civil partners’) which is formed when they register as civil partners of each other.

Consumer price index
This shows the changes in the cost of living. It reflects the movement of prices covering a specific range of goods and services over time. The amount by which pensions are increased annually is based on movement in the Consumer Price Index (CPI) during the 12 months to the previous September.

Contracted-in/contracted-out
As well as providing a flat-rate pension, the DWP is also responsible for working out and paying pensions under S2P (State Second Pension). Employers can choose to contract-out of S2P by guaranteeing to pay a second pension at least as good as S2P (known as a Guaranteed Minimum Pension). The LGPS is a contracted-out pension scheme.

Contributions
A regular amount of money paid into a pension scheme in order to guarantee you a pension at the end of your working career. Contributions into the LGPS will be between 5.5% and 7.5% of your gross pay and will be shown on your monthly/weekly pay slip. Higher contribution rates can be arranged through AVC or FSAVC plans.

D

Deferred member
A member who leaves the scheme with more than 3 months service (and hence becomes entitled to Deferred Benefits) is known as a Deferred Member. The member is not allowed to continue paying into the LGPS after leaving local government employment (unless they commence work with another authority offering the LGPS at a later date).

Department for Communities and Local Government (DCLG) (previously the Office of the Deputy Prime Minister)
The DCLG's primary interest is in working towards improving delivery and value for money from services offered by local authorities. It takes an active role in planning and implementing various programmes, with the co-operation of local authorities, in order to ensure local government works as efficiently as possible. For further information, please visit the DCLG website.   

Department for Work and Pensions (DWP)
An independent body which administers the State Pension Scheme. Any worker in the UK can become entitled to a State Pension, whereas only people who have worked in Local Government (and paid into the LGPS) are entitled to an LGPS pension. The Benefits Agency administers the State Pension Scheme, Local Authorities (eg Buckinghamshire County Council, Bedfordshire County Council, etc) are only responsible for the LGPS. (See also Benefits Agency).

Discretion
This is the power given by the DCLG to enable your employer or your administering authority to choose how they will apply the Scheme in respect of certain of its provisions. Under the LGPS your employer or your administering authority are obliged to consider certain of these discretionary provisions and to pass resolutions to form a policy of how they will apply the provision. In respect of the remaining discretionary provisions they are advised to do so. They have a responsibility to act with prudence and propriety in formulating their policies and must keep them under review. You may ask your employer or your administering authority what their policy is in relation to a discretion.

E

Early leaver
A member of the scheme who leaves before pension benefits are brought into payment, normally becoming entitled to preserved/deferred benefits.

Early retirement
A member who leaves the scheme, with immediate entitlement to benefits, before the recognised normal age of retirement, age 65 for men and women.

Earnings cap
If you joined the scheme on or after 1st June 1989, the earnings cap was the maximum pay that you could pay contributions on and upon which your benefits can be calculated. The figure was reviewed annually by the Government and increased in line with the Retail Prices Index and the final Earnings Cap for 2005/6 was £105,600. Please note that the Earnings Cap has ceased due to the new lifetime allowance limits introduced in the April 2006 regulations.

Eighty-five year rule
This was a method by which scheme members were allowed to retire early (rarely earlier than 60) and without a percentage reduction, if their age and total membership in the scheme totalled 85 years or more. It was withdrawn from the LGPS on 1st October 2006.

F

Final pay
This is normally the pensionable pay you earn in the 365 days immediately preceding your retirement date, or the best average three years of the previous ten years' pensionable pay (if one of these happens to be a higher figure). If you work part-time (less than 37 hours a week and/or term-time only), the figures used in your pension calculations are up-rated to that of full-time equivalent pensionable pay (i.e. the annual pensionable pay you would have received had you worked 37 hours a week).

Flexible retirement
This allows you to start receiving some or all of their benefits from an earlier age (i.e. 55 years and over), yet continue working for their employer for several more years in exchange for reducing their hours and/or grade/scale point. Scheme members MUST have their employers consent in order to 'retire' in this manner. Please contact your employer’s Human Resources department and ask them for details of their Flexible Retirement policy.

Frozen contributions
A member who leaves the scheme with under 3 months pensionable service becomes entitled to a refund of contributions or a transfer-out. Until one of these choices is made, the contributions are 'frozen' - retained by the Council until a choice is made. It should be noted that members shall never become entitled to benefits from these frozen contributions, even if they leave at retirement age or keep the contributions with the Council until the normal retirement date (65).

Note: from 6th April 2006, electing to take a refund of contributions will result in ALL rights to ANY other LGPS benefits you may have accrued (within England and Wales) being waived. This includes (but is not restricted to); frozen contributions, concurrent employments, deferred benefits, pension credits on divorce and/or pensions in payment. As soon as your election for a refund is received, all of these benefits shall become null and void, with immediate effect. This covers benefits held by any administering authority of the LGPS (England and Wales); not just the authority that administers your current fund.

FSAVC (Free Standing Additional Voluntary Contributions)
As opposed to an in-house AVC scheme (organised through our in-house providers; Clerical Medical and Prudential), a FSAVC is an arrangement you make independently of us with a pension provider of your choosing. Once you retire, you can use the contributions paid into your FSAVC to purchase extra pension from a provider of your choice. Note: you will only be able to buy this pension from us if you are paying into the in-house scheme.

G

Guaranteed minimum pension (GMP)
In agreeing to contract-out of S2P/SERPS, an employer must agree to guarantee a second pension of at least equivalent value had the member stayed paying into S2P/SERPS. This is the minimum pension that the LGPS must pay you, had you been a member of the LGPS on and between 6th April 1978 and 5th April 1997.

I

Ill health early retirement
A scheme member can retire from their employment if their illness prohibits them from permanently completing their employment duties. Ill health retirement will only apply to those cases where an Independent Registered Medical Practitioner qualified in occupational health has agreed that the member cannot return to their duties. In the event that the retirement is agreed upon, all of the usual restrictions to retirement (age, pensionable service etc) are removed.

In-house AVC
The AVC scheme provided by an occupational pension scheme. Our current providers are Clerical Medical and Prudential.

L

Late retirement
This refers to a scheme member who works up to, and beyond, their normal retirement age (65). They will be eligible for benefit payments immediately, once the decision to leave their existing employment has been made. Members can remain in the LGPS up to age 75.

Local Government Employers (LGE)
The LGE's (formerly known as the LGPC) primary function is to act as the representative for all of the local authority pension funds within the United Kingdom, particularly in their dealings with the DCLG. For further information, please visit the DCLG website.

Local Government Pension Scheme (LGPS)
The occupational pension scheme available to all local government employees in England and Wales, including those employees who are entitled to join the pension fund under an admission agreement agreed with the local administering authority. It includes civilian members of Police and Fire Authorities and support staff at further education establishments, but NOT uniformed officers or teachers.

M

Member
An employee of the County Council, District Councils, Unitary Authority and/or Admitted Bodies who, at some stage in their working career, has been a member of the Local Government Pension Scheme. A person (usually an active member) who is in a pension scheme and is entitled to benefits under the scheme.

N

Nominated cohabiting partners
A Nominated Cohabiting Partner is a partner on whom financial dependency or interdependency can be proven for at least two years. To be eligible for nominated partner status, both cohabiting partners must sign a declaration form stating that they are free to marry/register their civil partnership.

Normal retirement date
The date to which the majority of scheme members are expected to work before they retire. In the case of the LGPS, the normal retirement date for both men and women is the day before their 65th birthday.

O

Occupational pension scheme
A pension scheme to which only employees of a particular company or related group of employers is eligible to contribute. As soon as the employee leaves the employer, they will no longer be eligible to pay into the pension scheme.

P

Pensionable pay
This is your normal salary or wages plus any other taxable benefit specified in your contract as being pensionable (shift allowance, bonuses, contractual overtime, statutory sick pay etc). Pensionable pay does not include overtime you choose to work (as opposed to overtime you are contracted to do), travelling or subsistence allowance, pay instead of notice, pay instead of holidays, the value of a car or pay received instead of a car.

Pensionable service
This can be accrued by working for the County Council, Local Authorities or Admitted Bodies in a non-teaching capacity. The period of time you pay into the LGPS, whilst working in Local Government, is known as your Pensionable Service (See also total membership ).

Pensions increase
This is a figure applied annually (every April) to all active pensions paid by our pensioner payroll. It is a figure intended to offset the cost of living inflation, so in effect it preserves the value of a pension throughout its time in payment. Pensioners who have not been on pension for 1 full year or people retiring under the age of 55 (bar ill-health) do not qualify for the increase straight away. Rates can be found on our pensioner pages.

Pensions ombudsman
The Pensions Ombudsman is responsible for investigating complaints and settling disputes which can arise between scheme administrators and scheme members. Pension schemes must follow the Ombudsman’s rulings, but scheme administrators are allowed to challenge the rulings in court if they so wish. Visit the Pensions Ombudsman website for further information.

Personal pension plan
This is an individual pension arrangement between a person and a financial company of their choosing. They generally offer a more flexible approach to pension contributions, whereas an occupational scheme is more geared towards accommodating a particular type of contributor/employee.

Preserved benefits
If you leave your local government employment with over 3 months pensionable service, you will become entitled to a 'Preserved Benefit' (sometimes referred to as 'Deferred Benefits'). You will receive a monthly pension (and, depending on when you stopped contributing to the LGPS, a one-off tax free lump-sum) from this preserved benefit when you reach normal retirement age (or earlier, depending on circumstances). If you would rather not receive a pension from the Buckinghamshire County Council pension fund, you may elect to transfer your preserved benefit to another pension scheme (either another occupational scheme or a private pension).

Protected rights
The lowest amount of benefits that a Contracted-Out Money Purchase Scheme (COMPS) can pay to a member. The amount is worked out by using the money purchase method, with minimum contributions or minimum payments making up the payments to the fund.

Policy statement
This is a statement that your employer and your administering authority must produce, setting out the policies that they have resolved to follow in exercising certain discretions under the LGPS. Other discretions may also be included. You should be notified of the policies contained on the Statement and where changes are made, you should be notified within one month of the change occurring. You may ask your employer and your administering authority for the latest copy of their Policy Statements.

Q

Qualifying service
A period of service accrued in a previous employment, which, although not actually transferred to the new pensionable employment, does provide the scheme member with additional benefits (most notably in meeting membership dependant criteria such as the ’85-Year Rule’). The service itself does NOT contribute towards pension benefits accrued on this new employment. The majority of Qualifying Service is collected from previous Local Government employments.

R

Remuneration
In the case of the LGPS, a persons pensionable remuneration is their last 365 days pay (certain payments are pensionable, others aren't - if in doubt, check with your payroll department). Please note, your pensionable remuneration will almost certainly be different (in most cases, lower) to your salary scale point, due to the final 365 days (for the majority) straddling two financial years.

S

Stakeholder pension scheme
These are designed to be low-charge, flexible and easy to use. They are intended for people who cannot pay into an occupational scheme or a suitable personal pension plan. One of the bonuses of such a scheme is that you can choose how much to pay into your pension as-and-when it suits you. When you eventually come to retire, you will use the money saved up to purchase a suitable pension from a personal pension provider.

State Second Pension (S2P) or State Earnings Related Pension Scheme (SERPS)
If a person in employment does not pay into an occupational or personal pension scheme, they will automatically pay into S2P/SERPS. As soon as an employee’s earnings exceed a lower earnings limit, payments are made to S2P/SERPS in the form of additional national insurance contributions. You cannot 'opt-out' of S2P/SERPS unless you have an alternative pension scheme to pay into.

State retirement age
65 for men and 60 for women. From 2010 will change for women as shown in the table below, so that by 2020 state retirement age will have been equalised for men and women at age 65.
Between 2024 and 2046 the state pension age for both men and women will gradually increase to age 68.

State retirement age
Date of birthState retirement age
Before 6th April 1950 60 (women only)
6th April 1950 - 5th April 1951 Between 60 & 61 (women only)
6th April 1951 - 5th April 1952 Between 61 & 62 (women only)
6th April 1952 - 5th April 1953 Between 62 & 63 (women only)
6th April 1953 - 5th April 1954 Between 63 & 64 (women only)
6th April 1954 - 5th April 1955 Between 64 & 65 (women only)
6th April 1955 - 5th April 1959 65 (men & women)
6th April 1959 - 5th April 1960 Between 65 & 66 (men & women)
6th April 1960 - 5th April 1968 66 (men & women)
6th April 1968 - 5th April 1969 Between 66 & 67 (men & women)
6th April 1969 - 5 April 1977 67 (men & women)
6th April 1977 - 5th April 1978 Between 67 & 68 (men & women)
6th April 1978 or later 68 (men & women)

T

Total membership
This is the amount of membership that counts for:

Entitlement to a benefit:

  • The number of years and days that you have been a LGPS member (at full calendar length for part time employment).
  • The number of years and days purchased by a transfer into the LGPS from another pension arrangement.
  • Any part time employment prior to joining the LGPS which you have been allowed to count (at full calendar length).
  • Any additional years of membership purchased by you or purchased by converting AVCs into a period of membership.
  • It does not include any additional years of membership which have been granted to you by your employer.

Calculating a benefit

  • The number of years and days that you have been a LGPS member (with part time employment reduced to its whole time equivalent length).
  • The number of years and days purchased by a transfer into the LGPS from another pension arrangement.
  • Any additional years of membership that you have bought or which have been granted to you by your employer.
  • Any additional years of membership purchased by converting AVCs into a period of membership.
  • Any membership granted by way of ill health enhancement.

W

Widow/er or civil partner's pensions
A pension paid to the surviving spouse/civil partner of a former pension scheme contributor. The spouse/civil partner's pension is a standard part of the benefits package open to LGPS members; no extra cost is required to fund this.