Glossary and Definitions

Scheme Terms

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There are currently 47 names in this directory
Accrued benefits
The benefits for service already completed.

Administration
The day-to-day running of a pension scheme, eg collection of contributions, payment of benefits, record-keeping.

Administrator
The administrator for the Fund is Premier Pensions Management Limited (Premier).

Annual allowance
An amount against which an annual increase in benefits is tested to determine whether a tax charge applies to the individual.

AVC
Additional voluntary contributions. Contributions over and above a member's normal contributions, if any, which the member elects to pay to an occupational pension scheme in order to secure additional benefits. A legal requirement until 2006, but still offered by many schemes.

Closed scheme
A pension scheme that no longer admits new members. Contributions may or may not continue and benefits may or may not be provided for future service.

Commutation factors
Commutation factors dictate the extent to which pension benefits are increased or reduced by late or early retirement. They also determine the relationship between the lump sum taken (if any) and the level of the remaining pension.

Company service
The length of time you’ve worked for an employer who participates in the Fund, without a break in service.

Consumer Prices Index (CPI)
The government’s principal measure of price inflation. It’s an internationally comparable measure of inflation that employs methodologies and structures that conform to international legislation and guidance.

Contracted out
Commonly used to describe a scheme that provides benefits in place of the State Second Pension (S2P, previously SERPS). Currently these benefits from the scheme are paid for by means of a rebate of the relevant NI contributions

Data Protection Act 1998
As Data Controller under this Act, the trustee has both a legal obligation to process to process data relating to you, and a legitimate interest in doing so. This may include passing on data to the Plan’s actuary, auditor, administrators, and such other third parties as may be necessary

DB scheme
Defined benefit scheme. A scheme in which the benefits are defined in the scheme rules and accrue independently of the contributions payable and investment returns. Most commonly, the benefits are related to members' earnings when leaving the scheme or retiring, and the length of pensionable service. Also known as a “final salary” or “salary-related” scheme.

DC scheme
Defined contribution scheme. A scheme in which a member's benefits are determined by the value of the pension fund at retirement. The fund, in turn, is determined by the contributions paid into it by that member and by any investment returns. Also known as a “money purchase” scheme.

Deferred member
A member entitled to a deferred pension (sometimes known as “preserved benefits”).

Deferred pension
A benefit relating to the past service of members of an occupational pension scheme who are no longer active members but have not yet retired. The benefits are payable at retirement or death, whichever occurs first.

Disclosure
The disclosure requirements define what information trustees are obliged to provide about a scheme and the benefits the scheme offers. Some of this information must be given in evidence automatically, and other aspects of it must be provided on request.

Earnings cap
The earnings cap is the limit on earnings to which contributions and benefits are related (£145,800 for the tax year 2014/2015). The earnings cap will increase annually, broadly in line with the increase in the Retail Prices Index.

Final pensionable salary
Your best 12 consecutive months of pensionable salary drawn in the 36 months prior to retirement or leaving, and subject to the limitations of the earnings cap, if applicable.

Final salary scheme
See DB scheme.

Fund
The Cable & Wireless Superannuation Fund.

GMP
Guaranteed Minimum Pension. The minimum pension that an occupational pension scheme must provide as one of the conditions of contracting out of SERPS for service rendered before 6 April 1997 (unless it was a DC scheme contracted out through the provision of protected rights).

Gross pension
The amount of retirement pension available to you before any of it is exchanged for a cash payment at retirement. Your gross entitlement excludes any extra pension bought with additional voluntary contributions (unless you bought a joint-life pension from the Fund).

HMRC
Her Majesty’s Revenue & Customs

IDRP
Internal Disputes Resolution Procedure. The written procedure used to deal with disputes between beneficiaries on the one hand and trustees on the other, which occupational pension schemes are required to put in place. You can find more information on this procedure from the documents section of the website. Go to booklets and rules to download the full dispute resolution procedure.

Lifetime Allowance (LTA)
An amount introduced by HM Revenue & Customs as part of the Finance Act 2004 against which retirement and death benefits will be tested, once they are brought into payment, to determine whether an additional tax charge will be levied. Find out more about the Lifetime Allowance here https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance.

Limited Price Indexing (LPI)
For pension earned before 6 April 2006, an annual increase based on either the movement in the Retail Prices Index or five per cent, whichever is lower. For pension earned after this date, the increase is capped at 2.5 per cent.

Normal retirement date
For the majority of members this will be the last day of the month in which you reach age 60. Some members in the 1986 and former TR sections will have a different normal retirement age.

PAYE
Pay As You Earn. This is the collection of income tax by HM Revenue & Customs under schedule E regulations and applies to all UK payroll Fund pensioners. This will not apply to some Fund members who are paid through a non-UK payroll.

Pension input period
This has been set by the Trustee as the year ending 5 April, and is the period over which your pension accrual and additional voluntary contributions are tested against the Annual Allowance.

Pension Protection Fund (PPF)
Established to pay compensation to members of eligible defined benefit pension schemes, whose sponsoring employers become insolvent. The PPF is funded by a levy on all eligible DB schemes. The PPF became operational on 6 April 2005.

Pensionable salary
Your basic salary plus any fluctuating pay that you’ve been notified is pensionable, and subject to the earnings cap, if applicable.

Pensionable service
Your service as a contributing member of the Fund in years and days, plus any credits regarding which you’ve been notified.

Pensions administration
The day-to-day running of the scheme, including the collection and allocation of contributions and the routine calculation of the benefits of individual members on retirement, in deferment, on death, or on ill health. It also includes the maintenance of accurate and up-to-date member records and the management of operational risks.

Pensions Advisory Service
An independent organisation which gives free advice to the public about occupational or personal pension scheme. It does not give financial advice or advice on state scheme benefits. Formerly known as the Occupational Pensions Advisory Service (OPAS) when its remit was restricted to occupational pensions.

Pensions regulator
Regulates work-based pension schemes in the UK.

Preserved benefits
Benefits that arise upon an individual ceasing to be an active member of an occupational pension scheme, payable at a later date (eg to a member who leaves that employment before his or her retirement date).

Prospective Pension
Prospective pension. The pension you would expect to receive at NRA, based on your current pensionable salary and pensionable service up to NRA.

Qualifying service
Service as a member of the scheme, together with any service as a member of a previous scheme from which the benefits have been transferred.

Retained benefits
Any benefit retained in a previous pension scheme. This could be either a company pension scheme or a personal pension.

RPI
Retail Prices Index. The index of retail prices (for all items) published by the Office of National Statistics, or any substituted index published by that Office (or its successor), which is used to determine the rate of inflation over the previous 12 months. Increases to state pensions and index-linked gilts are equal to the rate of change in the RPI, while increases to private pensions in payment are dependent on the rate of change in the RPI.

S2P
State Second Pension. The earnings-related element of the state pension scheme that replaced the State Earnings Related Pension Scheme (SERPS), designed to enhance the basic state pension.

Scheme booklet
A booklet for members that should set out clearly the benefits offered by a pension scheme and how the scheme is run. The scheme booklet is given to all members of the scheme when they join.

Spouse
In relation to any individual scheme member, his or her wife or husband in a legally binding marriage, or, if applicable, his or her widow or widower; this is not meant to refer to a "common law" partner. A spouse shall, for the purposes of the scheme, include the civil partner of an individual (except where otherwise stated), and any reference to marriage or equivalent shall be said to include civil partnerships.

Tax-free lump sum
A sum of money available to pension scheme members at retirement in exchange for a reduction in pension payments. It is currently tax-free upon payment.

Transfer value
The amount of money that a scheme will pay to another pension arrangement in lieu of benefits that have accrued to a member. Sometimes referred to as a CETV (cash equivalent transfer value).

Trivial commutation
The conversion into a cash sum (commutation) of a pension that is below a prescribed level.

Trust deed
A legal document, executed in the form of a deed, that establishes, regulates or amends a (pension scheme) trust.
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