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Pension Terminology - A Glossary Of Key Terms

A to D

Active MemberAn employee who is currently paying into the Pension Scheme
Added YearsAn arrangement in place with the Pension Fund whereby a member can purchase additional pensionable service. The option to take out new Added Years contracts ended in April 2008, but existing contracts were able to continue.
Additional Maternity or Adoption LeaveLeave under section 73 or 75B of the Employment Rights Act 1996(1)
Additional Pension Contributions (APC)An arrangement with us to buy additional pension in the Scheme. This replaces what was formally known as Added Regular Contributions (ARCs) and Added Years (as explained above). We take extra contributions from the scheme member for a contracted number of years
Additional Paternity LeaveLeave under the Additional Paternity Leave Regulations 2010(2)A legal agreement which covers the terms of admission that apply to an Admitted Body
Additional Regular Contributions (ARC)These are similar to APCs. The option to take out new ARCs contracts ended on 31st March 2014
Additional Voluntary Contributions (AVC)Members can top up their pension benefits by building up a fund of money that is invested separately and dependent on the investment returns received. This can be used to buy extra pension provision at retirement (including a lump sum. We offer an in-house scheme with Prudential although some members still pay AVCs to our legacy providers
Administering Authority This is official name given to the role of Wiltshire Pension Fund in terms of our responsibility for administering the Scheme. Technically, Wiltshire Pension Fund is affiliated to Wiltshire Council and hence Wiltshire Council is both the administering authority as well as a Scheme Employer
Admission AgreementA legal agreement which covers the terms of admission that apply to an Admitted Body
Admitted BodyBodies that have an admission agreement with the Pension Fund to allow its employees to join or remain in the LGPS. There are three kinds of admission bodies: 'Community Admission Bodies' (CABs), 'Transferee Admission Bodies' (TABs) and 'Other Admission Bodies' (OABs)
Annual Benefit StatementEach summer we send members a summary of the benefits that we currently hold for them; these amounts are calculated based on the information that employers send to us. These are normally sent out in the summer and they are related to the value of benefits as at 31st March that year
Assumed Pensionable PayAssumed Pensionable Pay is a way of notionally calculating how much pensionable pay a member should have been receiving for any period of time when they were actually on reduced or nil pay (for example due to a long-term absence). More detailed information is available in the Employer's Guide
CARE PayCARE pay is the amount of pensionable pay (2014 definition) that a member received during a set period of time. We calculate a member's annual pension for all service after 1 April 2014 by multiplying the CARE pay by 1/49
Death GrantIf a member dies in service or shortly after retiring, a lump sum amount of money will be due. Normally this Death Grant will be paid to the person(s) nominated on the Expression of Wish Form unless the Pension Fund has any reasons not to do so (e.g. because it was signed a considerable time ago or the nominated person is deceased). In the absence of an expression of wish form, the death grant will normally be paid to the person's estate
Deferred BenefitsAn annual pension and possibly a lump sum held for a scheme member who has left the Scheme before retirement age. The benefits are held until retirement age (or whenever the member is eligible to draw them) and they are index-linked to keep pace with inflation
Deferred MembersAn employee or former employee who at some point was paying into the pension scheme. These members will hold a deferred benefit
Discount RateA discount rate is used to 'discount' back the value of pension liabilities that are due in the future to the current day. The discount rate is calculated differently depending on the reason why the pension liabilities are being calculated

E to Q

Eligible EmployeeFurther information concerning the eligibility of new employees can be found under Auto Enrolment
Employer DiscretionsDiscretions that the employer has under the regulations which generally relate to certain options surrounding administration or ways that an employer can enhance a member's pension. All employers must produce a discretions policy and send a copy to us
Expression of Wish FormA form for a Scheme Member to state who they would like any Death Grant to be paid to should they die in service or shortly after when they retire. Members areencouraged to complete these
Funding LevelA employer's Funding level is amount of its notionally allocated pension assets / pension liabilities. It is expressed as a percentage and based on a number of actuarial assumptions
Gainful EmploymentPaid employment for not less than 30 hours in each week for a period of not less than 12 months. This definition is used in ill health/capacity dismissals to determine which ill health tier would apply
Ill Health Liability InsuranceAn insurance policy available to employers in the Wiltshire Pension Fund, to cover strain costs associated with tier 1 and 2 ill health retirements
IRMP - Independent Registered Medical PractitionerIndependent Registered Medical Practitioner who is registered with the General Medical Council and holds a diploma in occupational health medicine (D Occ Med) or an equivalent qualification issued by a competent authority in an EEA state; and for the purposes of this definition, "competent authority" have the meaning given by section 55(1) of the Medical Act 1983(10); or is an Associate, a Member or a Fellow of the Faculty of Occupational Medicine or an equivalent institution of an EEA state. LGPS - The Local Government Pension Scheme (referred to as "The Scheme" or "the Pension Scheme" throughout this guide)
Opting OutWhen LGPS member decides to leave the Scheme whilst remaining employed. All members must complete an Opt Out form and send it to their payroll provider
Pensionable Pay

'Pensionable Pay' is the elements of pay that should be using for pensionable purposes. There are two Pensionable Pay definitions

  • Pensionable Pay 2008: This definition should be used for calculating Pension Remuneration.
  • Pensionable Pay 2014: This definition should be used for determining employee and employer contribution deductions are working out CARE pay.

Up to date definitions of pensionable pay can be found in the Employer's Guide

Pension RemunerationPension Remuneration is normally the average FTE pay for a member over the last year of their employment (or the two previous years if higher). However, Pension Remuneration is calculated slightly differently for different scenarios. A full description is provided in the Employer's Guide
Primary Contribution RateThe Primary Contribution Rate (previously known as Future Service Rate) is the amount of employer contributions required to fund the pension that an average employee will build up over the next year. It is calculated by the Fund actuary and reviewed periodically

R to Z

Retirement GrantA lump sum (where applicable) when a scheme member retires. It is usually paid into a bank account via the BACs system. Members have the option to convert some of their pension into lump sum
Resolution BodiesThese are bodies listed in Schedule 2, Part 2 of the LGPS Regulations 2013 (at present, all Town & Parish Councils fall under this definition). Resolution Bodies can choose whether or not to take part in the LGPS for some or all of their staff
Scheduled BodiesThese are bodies listed in Schedule 2, Part 1 of the LGPS Regulations 2013. Further information concerning the eligibility of new employees can be found in Becoming an Employer. Scheduled Bodies must take part in the LGPS for all eligible staff
Scheme EmployerThe collective name of Resolution Bodies and Scheduled Bodies. Admitted Bodies are also generally treated as Scheme Employers for the purposes of the Regulations
Scheme MemberThe collective name for Active, Deferred & Pensioner Members (sometimes just referred to as "Members" within this guide)
Secondary Contribution RateThe secondary contribution rate is an adjusted to the primary contribution rate and is used to allow for any funding deficit or surplus that is place at a certain point in time
Starter PackEither an electronic or hard copy of pack that provides the member with various pieces of the information about the Scheme as well as how to transfer in previous pensions etc
Statutory ResolutionA resolution passed by a Town and Parish Councils (or another Resolution Body) stating that a specific employee or a group of employees will be deemed eligible to join the scheme
Statutory NotificationA statement sent to scheme members showing the information about their pension record held by the fund
UnderpinThe 'underpin' is a provision brought in from April 2014 to protect members: Born before April 1957; Who were a member of the Scheme on 1 April 2012; and who do not have gap of more than 5 years service (applying after April 2012) The protection means that we need to calculate their post April 2014 service using the old final salary methodology as and the CARE methodology and then award the member whatever calculation produces higher pension benefits
Variable Time EmployeeAn employee whose pay is calculated by reference to duties rather than the number of hours worked OR an employee whose duties only have to be performed on an occasional basis

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