Devon Pension Services
A - Z and Glossary
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |
A
Active/Current Member
An active member of a pension scheme who is accruing pensionable service via contributions paid to the pension scheme on a regular basis.
Actuarial Reduction
An actuarial reduction is usually applied to a member's pension if they retire before they are 65. However, retirement before 60 requires employer's consent.
The relevant actuarial reduction table is shown below;
| Number of Years Early | Pension Reduction Males |
Pension Reduction Females |
Lump Sum Reduction |
| 0 | 0% | 0% | 0% |
| 1 | 6% | 5% | 2% |
| 2 | 11% | 10% | 5% |
| 3 | 16% | 15% | 7% |
| 4 | 20% | 19% | 9% |
| 5 | 24% | 23% | 12% |
| 6 | 28% | 27% | 14% |
| 7 | 32% | 30% | 16% |
| 8 | 35% | 33% | 18% |
| 9 | 38% | 36% | 20% |
| 10 | 41% | 39% | 22% |
| 11 | 44% | 42% | 24% |
| 12 | 47% | 45% | 26% |
| 13 | 50% | 47% | 27% |
| 14 | 52% | 49% | 29% |
| 15 | 54% | 51% | 31% |
Actuary
An actuary is a professionally qualified body or person, who is able to offer expert advice to those organisations, employing their services. The advice can range from a purely data/information provisional role, right through to input and production of pension fund policy and legislation.
Added Years
Added Years is an option for scheme members to purchase additional LGPS service in order to supplement their accrued service (and so increase the value of their pension). Members pay increased contributions to purchase this additional service. Added Years were removed from the LGPS with the introduction of the April 2008 'New Scheme' (although any Added Years contracts entered into before this day will continue to be honoured).
Administering Authority
Devon County Council is the administering authority for LGPS contributors employed by local authorities (see below) in Devon. Amongst other things the administering authority is responsible for maintaining member records, dealing with member queries/requests, investment of the fund and paying your pension.
Admitted Body
An Admitted Body is a term given to an employer who is carrying out work that is very similar in nature to services provided by a local authority, e.g housing associations, specialist schools etc). An employer must apply to become an Admitted Body and if successful means that its employees may join the LGPS.
Annual Allowance
This is the amount by which the value of the pension benefits may increase in any one year (disregarding the year that all the benefits become payable) without having to pay tax at 40% on the excess. The annual allowance for 2009/2010 is £245,000.
Annual Benefit Statement
An annual benefit statement provides a benefit calculations for every member held on our pensions database. It will include a benefit calculation for every employment a scheme member might have. Existing pensioners, employees who have left the scheme with no benefit entitlements and/or deceased members do not receive Annual Benefit Statements.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.
Additional Voluntary Contributions (AVCs)
AVCs are paid by a scheme member in order to provide for an additional retirement benefit. The contributions are paid into a 'pot' held by an external AVC provider, from which retirement benefits will 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 pensionable earnings (although this does have a limit of sorts; £245, 000 per annum). Devon County Council currently has arrangements with two AVC providers; Equitable Life and Prudential.
B
Beneficiary
A person who will receive some form of benefit payment from the scheme e.g a spouse's pension payable on the death of an existing scheme member).
Benefits Forecast/Estimate
An estimate of what an individuals pension is likely to be at age 60 or beyond that can be produced at any time. This is not a guaranteed prediction
C
Cash Equivalent Transfer Value (CETV)
A Cash Equivalent Transfer Value (CETV) is a lump sum in today's terms of the rights accrued within a member's pension scheme. It assumes the member is leaving the service and makes a pension transfer to an alternative pension arrangement.
Contributions Equivalent Premium (CEP)
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 National Insurance Contributions Office to cover the cost of reinstating the member into Second State Pension Scheme (S2P)
Civil Partnerships
Civil partnerships in the UK, granted under the Civil Partnership Act 2004, give same-sex couples rights and responsibilities identical to those in a civil marriage.
Cohabiting partner
Couples who live together as husband and wife but do not marry or enter a civil partnership. If the LGPS member wants their partner to have survivor's benefits, they need to both complete the Nomination of Cohabiting Partner form.
Consumer Price Index (CPI)
Pensions in payment and deferred benefits are increased inline with CPI. CPI is a measure of inflation and is very similar to the Retail Prices Index (RPI) but the major difference is that CPI does note include mortgage interest payments.
Contracted-In/Contracted-Out
The state pension scheme is made up of two parts; the basic state pension plus anearning related top up (called the Second State Pension, S2P). Some pension schemes, the LGPS being one, can contract out of S2P by guaranteeing to provide a certain level of benefits. Members of these pension schemes will pay lower national insurance contributions.
Contributions
A regular amount of money paid into a pension scheme in order to guarantee a pension at the end of a working career. Contributions into the LGPS will be between 5.5%-7.5% of gross pay (see table in Current Member section) and will be shown on the monthly/weekly pay advice. It is possible to pay even higher contribution rates, by paying into an AVC or FSAVC plan.
Cost of being a member of the LGPS
This is in proportion to salary and ranges from 5.5% - 7.5% depending on rate of pay.
D
Death grant Expression of Wish
A form can be completed by the LGPS member to say who they would like to nominate to receive their death grant if they die in service.
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 take other local authority employment).
Department for Communities and Local Government (DCLG)
The DCLG's primary interest is in working towards improving delivery and value for money from services offered by local authorities. It is responsible for writing the LGPS rules. For more information, please visit their website.
Department for Work and Pensions (DWP)
DWP is the government body responsible for administering the State Pension Scheme. Any worker in the UK could be 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.
E
Early Leaver
A member of the scheme who leaves before pension benefits are brought into payment.
Early Retirement
A member who leaves the scheme, with immediate entitlement to benefits, before the recognised normal retirement age of 65 for men and women.
Eighty Five Year Rule
The Eighty-Five Year Rule was a method by which scheme members were allowed to retire early without a percentage reduction, if their age and total membership in the scheme totalled 85 years or more. It was withdrawn from the LGPS as of the 1st October 2006. Please see our notes on the '85 Year rule' for further explanation on how the removal of the rule could affect you.
Employee's Guide
A guide to the Local Government Pension Scheme
Expression of Wish
A form completed by the LGPS member nominating who will receive their death grant if they die in service.
F
Final Pay
This is normally the pensionable pay earned in the 365 days immediately preceding your retirement date, or one of the previous two years pensionable pay whichever is the higher figure. If part-time (less than 37 hours a week and/or term-time only), the figures used in the pension calculations are uprated to that of full-time equivalent pensionable pay.
Please note that if your hourly rate has dropped within the last 10 years, benefits may be calculated differently because your pensionable pay has decreased. Final pay may be calculated on the average of any 3 consecutive years in the last 13 years (ending on a 31st March) after allowing for inflation If you think this may apply to you please let Devon Pensions Services know, before you leave. This option cannot apply once you have left
Please the attached leaflet 
(132KB - pdf help) on reductions in final pay.
Flexible Retirement
The Flexible Retirement option allows scheme members to start receiving their benefits from an earlier age (currently 55 years and over), yet continue working for their employer for several more years in exchange for reducing their hours and/or scale point. Scheme members must have their employer's consent in order to retire in this manner.
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. Members will not be entitled to benefits from these frozen contributions, even if they leave at retirement age or keep the contributions frozen with the council until the normal retirement age.
Free Standing Additional Voluntary Contributions(FSAVC)
As opposed to an in-house Additional Volunraty Contribution Scheme organised through our in-house providers, a FSAVC is an arrangement made independently of us with an alternative pension provider. On retirement the contributions paid into the FSAVC can be used to purchase extra pension from a provider of your choice. Note you will only be able to buy this additional pension from us if you are paying into the inhouse scheme
Fund
Each LGPS administering authority pays its benefits from a dedicated pension fund. Both the scheme member and their employer pay into this fund in order to provide retirement benefits at retirement age or earlier. Contributions paid into the scheme are invested in a variety of stocks and shares overseen by the funds investment management team.
G
Guaranteed Minimum Pension (GMP)
This is the minimum pension that the LGPS must pay for those who were members of the LGPS on and between 6th April 1978 and 5th April 1997.
H
High earners tax relief restrictions
The Government has announced plans to change the tax limits applying to pensions from April 2011. This will have an impact on high earners and those that receive a large increase to pay. i.e promotion.
For more information please see here
I
Ill Health Early Retirement
Members are entitled to an ill health pension if they have at least 3 months' membership and are certified as being "permanently incapable of discharging efficiently" their duties. Benefits will be calculated using service accrued up to your ill health retirement date, plus an enhancement depending on the severity of illness -More information
Internal Dispute Resolution Procedure
The IDRP is the formal complaints procedure used when an informal investigation into a expression of dissatisfaction is not resolved to the member's approval.
J
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K
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L
Late Retirement
Late retirement refers to a scheme member who works up to, and beyond, their normal retirement age without receiving any payments in respect of their pension entitlement. They will be eligible for immediate payment of benefits as soon as they leave their current employment (a member must retire before their 75th birthday).
Lifetime Allowance (LTA)
The Lifetime Allowance is set by the Treasury and is £1.8 million for 2010/11. If the total value of pension benefits accrued is more than the LTA, tax has to be paid on the excess unless the member is registered for protection with HMRC. The total value does not include any state retirement pension credit or any spouse's, Civil partner's or dependent's pension.
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 Department of Communities & Local Government. For further information, please visit their website.
Local Government Pension Scheme (LGPS)
The occupational pension scheme available to all local government employees in England and Wales. It includes those who are entitled to join the pension scheme under an admission agreement between the administering authority and their employer.
M
Member
An employee of the County Council, Unitary and local authorities and/or Admitted Bodies who, at some stage in their working career, has been a member of the Local Government Pension Scheme. The term is generally used when referring to an active member of the pension scheme who is still in local government employment and is paying contributions to the scheme every month.
N
Nomination of cohabting partner
In order for a cohabiting partner to be eligible to receive surviving partner benefits, they must have been formally designated on a Nomination of Cohabiting partner form. For more information on Nominated Cohabiting partners please click here (145KB - pdf help).
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
Pension sharing
A pension sharing order may be made as part of a divorce settlement.
Pensionable Remuneration
Normal salary or wages plus any other taxable benefit specified in the employment contract as being pensionable (shift allowance, bonuses, contractual overtime, statutory sick pay etc). Pensionable Pay does not include overtime, 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
The period of time paid into the LGPS whist working in Local Government, is known as pensionable service It can be acrued by working for the County Council, Local Authorities or Admitted Bodies (see also Total Membership).
Pensions Increase (PI)
Pensions Increase is a figure applied annually (every April) to all pensions in payment. It is a figure intended to off-set the cost of living inflation, so in effect it preserves the value of a pension throughout its time in payment.
Pensions Ombudsman
The Pensions Ombudsman is responsible for investigating complaints and settling disputes which can arise between scheme administrators/employers and scheme members. Pension schemes must follow the Ombudsman’s rulings, but scheme administrators are allowed to challenge the rulings in court. Vistit the Pensions Ombudsman website for further information.
Personal Pension Plan (PPP)
A Personal Pension Plan is an individual pension arrangement between a person and a financial company of their choosing.
Preserved Benefits
If a member leaves local government employment with over 3 months pensionable service, they become entitled to a 'Preserved Benefit' (sometimes referred to as 'Deferred Benefits'). They receive a monthly pension and a one-off lump-sum from this preserved benefit when they reach normal retirement age or earlier, depending on circumstances. Preserved Benefits may be transferred 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.
Q
Qualifying Service
A period of service accrued in a previous employment, usually in a different local government post. Althought not actually transferred to the new pensionable employment qualifying service does provide the scheme member with additional benefits, most notably in meeting membership dependent criteria such as the "85 Year Rule". Qualifying Service does not contribute towards pension benefits accrued on new employment.
R
Redundancy and efficiency
If a member leaves through redundancy or efficiency retirement, they can draw benefits as long as they meet the minimum age requirements.
Re-employment
If a member chooses to continue working after retirement, benefits may be reduced.
Remuneration
The reward or payment for work or a service.
Resolution body
An employer who has the power to decide if an employee or group of employees can join the LGPS and pass a resolution accordingly. In an LGPS context it relates to town and parish councils.
Retirement Process
For information on the processes involved when you retire please see the attached document (126KB - pdf help).
S
Scheduled body
A local authority that must join the Local Government Pension Scheme. Staff working for a local authority have an automatic right to join the LGPS.
Second State Pension (S2P)
The additional State Pension, or State Second Pension, is paid in addition to the basic State Pension. The calculation of the State Second Pension is complicated and has been changed since its introduction in 1978. Since 6 April 2002, its calculation basis was changed to be more generous for low and moderate earners.
Stakeholder Pension Scheme
Stakeholder Pension Schemes are designed to be low-charge, flexible and easy to use. They are intended for people who cannot pay into an occupational scheme. On retirement, the money saved is used to purchase a suitable pension from a pension provider.
State Earnings Related Pension Scheme (SERPS) 1978 - 1997
Superceded by the Second State Pension - see above.
State Retirement Age
This currently stands at age 65 for men and 60 for women. Changes are underway and eventually anyone born on or since 6 April 1978 will now have a state retirement age of 68. To check your state retirement age visit the date calculator on the Pension Service website
Survivor's benefits
Survivor's benefits can be paid to a widow or widower, a civil partner or nominated cohabiting partner. Some children are also eligible.
Tax relief restrictions for high earners
The Government has announced plans to change the tax limits applying to pensions from April 2011. This will have an impact on high earners and those that receive a large increase to pay. i.e promotion.
For more information please see here
Total Membership
Total membership of LGPS is the period of service during which a member has been employed by local government, plus any additions. The length of pensionable service is measured in years and days on a pro-ratad basis. Additions can include, transfer -in of previous service, payment of AVC's and /or buying additional years.
Topping Up Benefits
Benefits may be topped up to increase pension income at retirement.
U
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V
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W
Widow/er/Civil Partner's Pension and Nominated Cohabiting Partner's Pension
A pension is paid to the surviving spouse, civil partner or nominated cohabiting partner of a former pension scheme contributor. The survivor's pension is a standard part of the benefits package open to LGPS members.
Cohabiting partners must be free to marry each other and to have lived together for at least 2 years. All the conditions must be met before a survivors pension can be paid to a surviving cohabiting partner and a completed nomination form, signed by both partners must have been received by Devon Pension Services.
Working beyond 65
You may choose to find work again after retiring. Depending on individual circumstances new employment may affect the amount of local government pension received.
X
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Y
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Z
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