Jargon Buster

Bude Canal and Swan in Lower Basin

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Abatement

Abatement is the reduction or suspension of your pension during a period of re-employment in a post covered by the Local Government Pension Scheme.

Accrual rate

The rate at which pension benefits build up for each year of pensionable service in a defined benefit scheme.

Active member

An employee who is currently paying monthly pension contributions.

Actuarial reduction/percentage reduction

A reduction made to a members benefits in order to offset any additional cost arising from their payment in advance of the normal pension age.

Actuarial valuation

Every three years the Cornwall Pension Fund is valued by an actuary. The actuary assesses whether the fund has enough money to pay all its members and works out how much needs to be paid into the fund to ensure it has sufficient funds to cover its liabilities.

Actuary

The Actuary assesses whether the fund has enough money to pay all its members.

Additional Pension Contributions (APCs)

From April 2014 you will have the flexibility to buy additional pension using Additional Pension Contributions (APCs).

You have the flexibility to pay these regularly or as a lump sum payment.

The maximum amount you can purchase is £7,026 (this figure will increase each year in line with Pensions Increase).

You can also pay APCs to recover "lost" pension from going on unpaid leave. In this scenario your employer may share the cost.

Additional regular contributions (ARCs)

ARCs are paid into the Cornwall Pension Fund in order to purchase additional pension.  You can purchase £250 of additional pension or multiples up to a maximum of £5,000. The option to start an ARCs contract ceased on 31 March 2014.

Additional voluntary contributions (AVCs)

AVCs are paid into the Cornwall Pension Fund in order to provide you with additional benefits at retirement. You chose how much you pay (up to the maximum of 100% of your pensionable pay allowing for statutory deductions).

Administering authority

An administering authority is an authority who runs a pension fund.  Cornwall Council is the administering authority for the Cornwall Pension Fund.

Admission agreement

This is a formal document, required by the LGPS Regulations, which must be completed by the Admitted Body and Administering Authority, in order to allow the Admitted Body to participate in the Cornwall Pension Fund.

Admitted body

An organisation who has entered into an agreement with the administering authority to be part of the Cornwall Pension Fund.

Annual allowance

This is the amount by which your pension benefits can increase in any one tax year without suffering a tax charge. The annual allowance from April 2017 is £40,000. If the value of your pension benefits exceeds the annual allowance you will have to pay income tax on the excess amount at your marginal tax rate, i.e. 40% or 45%. 

Annuity

If you are paying AVCs, once you reach retirement your AVC fund can be used to buy an annuity (pension) from an insurance company, bank or building society.

Assumed Pensionable Pay (APP)

APP is the pay your pension is based upon in certain circumstances where you temporarily receive a reduced amount of pay; i.e. due to sickness / maternity leave. It is worked out using the last 3 months’ pay (or 12 weeks’ pay if your pay frequency is not monthly) prior to the reduction in pay, excluding any payments that are not payable every pay period paid during that period. It is uprated to an annual rate and then applied to the relevant period of absence as a proportion of that rate. If you have not received pay in the previous 12 months, your employer can make a determination to substitute a higher level of pensionable pay.

Basic state pension

A basic state pension is paid to those who have met the minimum national insurance contribution requirements. It is not related to earnings, unlike the state second pension.

Beneficiary

A person who is entitled to pension benefits in the event of a members death.

Career Average Revalued Earnings (CARE)

From April 2014, your pension benefits will be based on your Career Average Revalued Earnings (CARE).  The basics of CARE are:

  • For each year in the new scheme, you will build up a pension based on your pensionable pay in that year.
  • For each scheme year that you are a member of the main section of the scheme, a pension equal to a 49th of your pensionable pay will be added to your pension account.
  • Inflation increases will be added to ensure that your pension account keeps up with CPI.

Cash equivalent transfer value (CETV)

This is the actuarial cash value of your pension benefits.  

Civil partnership

A legal relationship between two people of the same sex, in accordance with the Civil Partnership Act 2004.

Consumer prices index (CPI)

Every April pension benefits are increased in line with the cost of living.  The cost of living increases to pensions in payment and to preserved pensions are linked to the consumer price index (CPI).

Continuous service

Pensionable employment which continues on from another pensionable employment without a break.

Contributions

Monies paid into the pension scheme by an employee and their employer.

Contributions equivalent premium (CEP)

Members of the pension scheme pay reduced national insurance contributions because the Cornwall Pension Fund is contracted out of the state second pension (S2P).  If you opt out of the pension scheme with less than 3 months pensionable service, you will receive a refund, less the certified amount which is the proportion of the contributions equivalent premium which will be paid to the department for work and pensions, to reinstate you into your state second pension.  You will therefore be entitled to a state additional pension at your state pension age.

Cornwall Pension Fund (CPF)

The Cornwall Pension Fund is part of the Local Government Pension Scheme (LGPS) and is a defined benefit, occupational pension scheme. The CPF is a secure fund as its benefits are set out in law, the scheme is independent of share prices and stock market fluctuations.  Employees who are contributing or who previously contributed to the pension scheme are members of the CPF. 

Death grant

The lump sum payable at the discretion of Cornwall Council, upon the death of  a current or former member.

Defined benefit scheme

The Cornwall Pension Fund is a defined benefit scheme, which means that the benefits payable are defined by law and are independent of share prices and stock market fluctuations, which makes the scheme very secure.

Department for Communities and Local Government (DCLG)

The DCLG is the government department which is responsible for the LGPS.

Department for work and pensions

The Department for Work and Pensions is responsible for administering state pensions.

Dependant

This is someone who is dependent on a pension scheme member.

Early retirement

Payment of your pension before your normal pension age.

Earmarking order

The court can issue an earmarking order on divorce.  Which means that part of your benefits are earmarked for your ex spouse or civil partner.

Expression of wish form

This form expresses your wishes as to who you would like to receive lump sum death benefits in the event of your death.

Expression of wish for lump sum death benefits form.

Final pensionable pay

For benefits accrued prior to 1 April 2014, your final pay is used to calculate your pension benefits and is usually your pensionable pay received in the last 365 days before retiring or leaving the Cornwall Pension Fund. If your pay went down in your last year of employment, we may use the best salary in your last 3 years of your employment to determine your final pay figure.  If your pay went down in the last 10 years before you left or retired, you could have elected to have your pension benefits calculated using an average pay from a three year period within 10 years.

If your pay was reduced due to sickness, or if you were on maternity, paternity or adoption leave, your final pay was taken to be the pensionable pay you would have received had you been at work.

For membership from 1 April 2014, career average revalued earnings replaced final pay as the basis of your pension.

Flexible retirement

Flexible retirement allows active members of the pension scheme to receive their pension benefits whilst still working.  However in order to take flexible retirement, members must either reduce their hours or move to a position on a lower grade.

GAD

GAD stands for 'Government Actuary's Department'. They work as actuaries and advisers for the public sector, and determine the factors that administrators of the LGPS use when calculating some aspects of its members benefits.

Gainful employment

You are in gainful employment if you are working 30 hours or more a week, for a period of 12 months or more.

Guaranteed minimum pension

This is the minimum pension that we must guarantee to provide as one of the conditions of contracting out between 6 April 1978 and 5 April 1997.

Her majesty's revenue and customs (HMRC)

HMRC are primarily responsible for the collection of taxes and national insurance contributions.

Ill health retirement

Ill health retirement occurs when an employer terminates an employees contract on the grounds that ill health has left the employee permanently incapable of carrying out the duties of his/her employment.

Independent Registered Medical Practitioner (IRMP)

LGPS Regulations define this as someone who is registered with the General Medical Council and; who holds a diploma in Occupational Health medicine (D Occ Med) or an equivalent qualification issued by a competent authority in an European Economic Area (EEA) state. Alternatively, is an Associate, a Member or a Fellow of the Faculty of Occupational Medicine or an equivalent institution of an European Economic Area (EEA) state. The IRMP must sign the certificate to confirm that they meet this criteria.

Index linked

The Cornwall Pension Fund is index linked, which means that it will rise each year in line with inflation.

Inter-fund adjustment

This is a form of pension transfer.  If you have previous LGPS membership with another local authority, these benefits can be transferred to the Cornwall Pension Fund.

Internal disputes resolution procedure (IDRP)

A complaints procedure, which provides scheme members and former members with the opportunity to settle any complaints or disputes they may have in regards to any decisions made, or their pension entitlements under the Cornwall Pension Fund

Lifetime allowance (LTA)

This is the total amount of pension you are allowed to accrue before you will have to pay a high level of tax.  This includes any pensions you have, not just your Cornwall Pension Fund pension.  However not many members are affected by the LTA, as it is £1,055,000 from April 2019.

Local Government Pension Scheme (LGPS)

The LGPS is a public sector pension scheme and is one of the largest schemes in the UK.  It provides retirement benefits for local authorities and participating employers.  Cornwall Pension Fund (CPF) is part of the LGPS.

Lower earnings limit (LEL)

The minimum amount you must earn before you pay national insurance contributions. The lower earnings limit for 2019/20 is £6,136 pa.

Lump sum death benefits

Benefits payable in the event of a member or previous members death.

Member

An employee who is contributing or who previously contributed to the Cornwall Pension Fund

Membership

The number of years and days an employee has been a member of the Cornwall Pension Fund, membership includes transferred in service from a previous pension provider and any additional membership purchased through additional contributions.

From 1 April 2014 membership will no longer be used to calculate your pension benefits as the LGPS is changing to a CARE scheme.

National insurance

National insurance contributions are collected from your wages by HMRC and go towards your state pension.

Nominated cohabiting partner

Members of the Cornwall Pension Fund who meet certain criteria, can nominate a cohabiting partner to receive a partners pension in the event of their death.

Nomination

Members of the Cornwall Pension Fund can nominate who they wish to receive lump sum death benefits in the event of their death.

Normal pension age (NPA)

Normal pension age is the age from which you can receive your benefits unreduced. In the Cornwall Pension Fund it is the same as your state pension age (but with a minimum age of 65).

Normal retirement age (NRA)

Normal retirement age is 65 for pre 1 April 2014 benefits. This is the age from which you can take your pre 1 April 2014 benefits unreduced. NRA changed from 1 April 2014 to normal pension age.

Occupational pension scheme

This is a pension scheme provided by an employer in order to provide retirement benefits for its members.

Part time employee

You are part time if you work less hours or weeks per year than your employer considers full time. Prior to 1 April 2014, if you worked part time, you would have accrued pension service at a slower rate. Going forward if you are a part time employee you will add to your pension account each year based directly upon how much you earn.

Pensionable pay

Pensionable pay is the element of your pay which you pay pension contributions on.

Pensionable service

This is the length of time you have been in the pension scheme, including any transferred in service from previous schemes.

From 1 April 2014 membership will no longer be used to calculate your pension benefits as the LGPS is changed to a CARE scheme.

Pensioner member/retired member

A member who has retired from active employment and who is entitled to receive their pension from their date of retirement.

Pension account

From 1 April 2014 you will have a Pension Account in the scheme for each pensionable employment you hold. So, for example, if you hold two separate pensionable part-time employments you will have two Pension Accounts.

Your Pension Account for an employment will hold the pension you have built up in that employment. See the how is my pension calculated? page for more information.

Pension credit

A pension credit is payable to a members ex spouse or civil partner after divorce or dissolution of a civil partnership. A pension credit is payable when a court orders a pension share on divorce or dissolution of a civil partnership.

Pension debit

A term used to describe the pension benefits taken from a scheme member in order to provide their ex spouse or civil partner with a pension, following a pension sharing order on divorce or dissolution of a civil partnership.

Pension sharing

This is the division of pension benefits on divorce after a court issues a pension sharing order.

Pension increase

Benefits are increased each year in line with the consumer prices index.  Increases are based on the previous years rise in inflation (from 30 September to 30 September) and are applied to pensions in payment and preserved pensions.

Pensions Advisory service (The Pensions Advisory Service - TPAS)

TPAS gives free advice on pension matters.

Pensions Ombudsman

The Pensions Ombudsman deals with complaints of maladministration and with disputes regarding pension entitlement.

Pensions Regulator (The Pensions Regulator)

The role of the Pensions Regulator is to protect scheme members and promote efficient administration of occupational pension schemes.

Preserved benefits

If you leave employment or opt out of the Cornwall Pension Fund with more than 2 years pensionable service in the scheme you will be entitled to preserved benefits. This means that your benefits will be held in the scheme until you reach pensionable age or until you elect to transfer your benefits to another pension arrangement.

Rule of 85

This rule allows some members to retire before NRA with an unreduced pension if they meet certain criteria.

Scheme year

The scheme year runs from 1 April to 31 March

State pension

A pension paid by the Department for Work and Pensions (DWP). The state pension is separate to the Cornwall Pension Fund (CPF) and any queries should be directed to the DWP.

State pension age

The age at which you can draw your state pension. From 1 April 2014, the normal retirement age for the LGPS will be the same. If you are unsure what your state pension age is then you can use the government state pension age calculator

State earnings related pension scheme (SERPS)

SERPS is the earnings related element of the state pension scheme.  SERPS are based on national insurance contributions paid between the lower and upper earnings limits from 6 April 1978 - 5 April 2002. SERPS was replaced by the state second pension S2P.

State second pension (S2P)

This scheme replaced the state earnings related pension scheme (SERPS).  S2P is a top up to the basic state pension.

Tax year

The tax year runs from 6 April to the next 5 April every year.

Transferred benefits

If you elect to transfer into the Cornwall Pension Fund from a previous pension arrangement, your transferred benefits will count towards your Cornwall Pension Fund benefits.

Transfer value

This is an amount of money paid from one pension provider to another, when a member elects to transfer previous pension benefits into their current pension provider.

Trivial commutation

Trivial commutation is the process whereby your small monthly pension can be converted in to a one off lump sum. 

Upper earnings limit (UEL)

The maximum amount of earnings on which full national insurance contributions are payable, and on which state pension benefits are based.

National insurance contributions of 2% are payable by employees above this limit. The upper earnings limit for 2019/20 is £50,000 pa.

Valuation/Actuarial valuation

Every three years the Cornwall Pension Fund is valued by the scheme actuary. The actuary assesses whether the fund has enough money to pay all its members and works out how much needs to be paid into the fund to ensure it has sufficient funds to cover its liabilities.

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