Glossary
Added years
Added years were a way to increase membership in the LGPS. This option is no longer available, but, existing arrangements continue from 1 April 2014 on the terms of the contract when they were originally taken out.
Additional regular contributions (ARCs)
ARC’s used to allow the purchase of additional scheme pension in steps of £250 per year, up to a maximum of £5,000. They replaced added years, although added years contracts in place before 1 April 2008 still continue. ARCs have now been replaced by additional pension contributions (APCs). Contracts that were taken out before ARCs stopped remain in place
Additional pension contributions (APCs)
Additional voluntary contributions (AVCs)
These are extra payments to increase your future benefits. You can also pay AVCs to provide additional life cover. All local government pension funds have an AVC arrangement in which you can invest money through an AVC provider, often an insurance company or building society. AVCs are deducted directly from your pay and attract tax relief.
Admission body
An employer that chooses to participate in the scheme under an admission agreement. These tend to be employers such as charities and contractors.
Assumed pensionable pay
A notional pay figure to make sure your pension isn't affected by any reduction in pensionable pay due to a period of sickness or injury, relevant child related leave, or reserved forces leave.
If you retire due to ill health, assumed pensionable pay is used to work out any enhancement to your pension.
If you die in service, the lump sum death grant is based on assumed pensionable pay. Any enhancement to the survivor benefits paid after your death will also be based on assumed pensionable pay.
The assumed pensionable pay is worked out as the average of the pensionable pay you received for the twelve weeks (or three months if paid monthly) before the period of reduced pay or no pay. This figure is then grossed up to an annual amount and then divided by the period of time you were on reduced pay/no pay for sickness or injury, relevant child related leave, or reserve forces service leave.
Automatic enrolment date
This is the earlier of:
- the day you reach age 22 provided you're earning more than £10,000 a year in the job, or
- the beginning of the pay period in which you first earn more than £10,000 in the job, on an annualised basis, provided you're aged 22 or more and under state pension age at that time.
Automatic lump sum
All scheme members who have membership built up before 31 March 2008 have an automatic lump sum at retirement, based on the membership until that date.
Career average revalued earning scheme (CARE)
Guaranteed pension based on pay received for each scheme year over your membership. Each year’s pension is then revalued by inflation.
Civil partnership (civil partner)
A civil partnership is a relationship between two people that is formed when they register as civil partners of each other.
Cohabiting partner
An eligible cohabiting partner is a partner you are living with who, at the date of your death, has met certain conditions for a benefit to be provided.
Consumer Prices Index (CPI)
The Consumer Prices Index (CPI) is the official measure of inflation in the United Kingdom. This is currently the measure used to adjust your pension account at the end of every scheme year as an active or deferred member of the scheme. CPI is also used to increase the value of pensions in payment every April. The adjustment ensures your pension keeps up with the cost of living.
Contracting out
LGPS members used to be ‘contracted out’. This was where members who paid national insurance contributions, contributed towards the basic state pension, but not towards the additional state pension known as SERPS or state second pension (S2P) under the old two tier state pension.
Contracting out ended in April 2016 when the new single tier state pension came into force.
Defined benefit scheme
The benefits built up in a defined benefit scheme are fixed and worked out on the salary and service of a member. The LGPS is such a scheme.
Defined contribution scheme
In a defined contribution scheme, a pension pot is built up by both the employer and the member paying contributions which are then invested. At retirement the member will traditionally secure their pension by buying an annuity. However, freedom and choice legislation introduced in April 2014 has allowed members to access their pension pot more flexibly.
Designating Body
Employers that can designate employees for access to the LGPS. These are usually town and parish councils.
Discretion
Discretion is the power given by the LGPS to choose how to apply the Scheme rules in certain situations. Your employer and pension fund have the power to exercise different discretions. Each employer in the fund will have a document called a 'Discretionary Policy' which outlines their rules on different discretions
Eligible child/children
An eligible child is:
- a natural child born before, on or within 12 months of a member’s death
- an adopted child born before or on the date of the member’s death
- a step-child or a child accepted by you as being a member of your family (this doesn’t include a child you sponsor for charity) and be dependent on you at the date of your death.
Eligible children must meet the following conditions:
- be under age 18
- be aged 18-23 and in full-time education or vocational training (although your administering authority can continue to treat the child as an eligible child notwithstanding a break in full-time education or vocational training)
- be unable to engage in gainful employment because of physical or mental impairment and either:
- has not reached the age of 23, or
- the impairment is, in the opinion of an independent registered medical practitioner, likely to be permanent and the child was dependent on you at the date of your death because of that mental or physical impairment.
Eligible Cohabitating Partner
A partner you are living with who, at the date of your death, has met all of these conditions for a continuous period of at least two years:
- you and your cohabiting partner are, and have been, free to marry each other or enter into a civil partnership with each other, and
- you and your cohabiting partner have been living together as if you were a married couple or civil partners, and
- neither you nor your cohabiting partner has been living with someone else as if you / they were a married couple or civil partners, and
- either your cohabiting partner is and has been dependent on you, or you are and have been financially interdependent on each other.
Eligible jobholder
An eligible jobholder is a worker who is aged at least 22, under State Pension Age, and earns more than the annual amount of £10,000.
Freedom and choice
Since 6 April 2015 members of certain pension schemes now have more freedom over how they take their money from their pension pot. These new flexibilities apply to members aged 55 or over, who have a pension based on how much has been paid into their pot (a defined contribution pension). These new flexibilities don't apply to defined benefit schemes, which includes the LGPS.
Final pay
This is usually the pay in respect of your final year of scheme membership on which you paid contributions, or one of the previous two years if this is higher, and includes;
- your normal pay
- contractual shift allowance
- bonus
- contractual overtime (but not non-contractual overtime)
- maternity pay, paternity pay, adoption pay
- any other taxable benefit specified in your contract as being pensionable.
If you were part time during your final year, your final pay is based on the pay you would have been due if you had worked full time.
If your pay in the final year is reduced because of sickness or child-related leave, final pay is the pay that would have been due if you had not been sick or on leave.
Normal pension age
Normal Pension Age is linked to your state pension age for benefits built up from April 2014 (but with a minimum of age 65), and is the age at which you can take the pension you've built up in full. If you choose to take your pension before your normal pension age it'll normally be reduced, as it's being paid earlier. If you take it later than your normal pension age it's increased because it's being paid later.
Occupational Pension Scheme
A scheme set up by an employer to provide pension or death benefits for its employees.
Occupational pension schemes are most commonly money purchase or defined benefits schemes. The LGPS is a defined benefits scheme.
When you leave a job you will generally have to stop building up pension savings in that employer’s scheme.
Pay period
A pay period is the length of time over which employee time is recorded and paid.
Pension account
Each scheme year the amount of pension you have built up during the year is worked out and this amount is added into your active pension account. Your account is revalued each year to take account of the cost of living. This adjustment is carried out in line with the treasury revaluation order index which, currently, is the rate of the consumer prices index (CPI).
You will have a separate pension account for each employment. That pension account will hold the entire pension built-up for that employment.
In addition to an active member’s pension account there are also:
- a deferred member’s pension account;
- a deferred refund account;
- a retirement pension account;
- a flexible retirement pension account;
- a deferred pensioner member’s account;
- a pension credit account; and
- a survivor member’s account.
Pension credit member
An ex-spouse or ex-partner who has been granted a share of their former spouse/partners pension benefits in the LGPS through a pensions sharing order.
Pension debit member
Pensionable pay
The pay that pension contributions are deducted from. Pensionable pay includes:
- your normal salary or wages
- bonuses
- overtime – both contractual and non-contractual
- pay for additional hours if you work part time
- maternity, paternity, adoption and shared parental pay
- shift allowance
- any other taxable benefits specified as pensionable in your contract.
You do not pay pension contributions on:
- any travelling or subsistence allowances
- pay in lieu of notice
- pay in consideration of loss of holidays
- pay as an inducement not to leave before the payment is made
- any award of compensation made for the purpose of achieving equal pay, other than a payment representing arrears of pay
- pay relating to loss of future pensionable payments or benefits
- pay paid by your employer when you are on reserve forces leave
- the monetary value of a car or pay received in lieu of a car
- any sum which has not had tax liability determined on it.
The rules about what counts as pensionable pay are different for elected members. Please see our Councillors page for more information.
Retirement lump sum
Reserve Forces Leave
Scheme year
State pension age
The State Pension Age is the earliest age you can receive the state pension. State pension age is currently age 67 for both men and women. From 2044, the age is expected to increase further to 68. This affects people born after April 1977. Find out more by visiting the State Pension Age calculator at https://www.gov.uk/state-pension-age/y/age
