Glossary

We’ve aimed to provide plain English explanations for some of the technical words we need to use when describing Scheme benefits.

Accrual rate

This is the calculation used to describe the rate at which you build up pension benefits whilst being a member of the Local Government Pension Scheme (LGPS) (whether under the final salary or Career Average Revalued (CARE) elements of the Scheme). It’s shown as a fraction (e.g. 1/60th, 1/80th, 1/49th). The lower the bottom number, the better the pension benefit you will receive for an equivalent amount of pensionable service.

Additional Voluntary Contributions (AVCs)

This is one of the ways you can make extra contributions to your pension pot to help increase what you might get. You’re able to do this via Aegon. If you’re considering this, you may wish to read our factsheet Increasing your future pension benefits for more information.

Automatic Enrolment

This is a Government initiative that helps people to save for later life through a workplace pension scheme. It’s compulsory for the employer to automatically enrol every eligible worker into the scheme and also pay a minimum contribution.

Contracting out ended from 6 April 2016 and the LGPS was certified as satisfying the Alternative Quality Test in relation to the jobholders employed by all participating employers who are relevant members of that scheme, as required by the Occupational and Personal Pension Schemes (Automatic Enrolment) (Miscellaneous Amendments) Regulations 2016.

Civil partner

This means a person who you have entered into a civil partnership with, regardless of their gender.

Cohabiting partner

Although there is no legal definition of living together, it generally means to live together as a couple without being married or in a civil partnership.

Deferred benefits

Your benefits are calculated when you leave the Scheme, based on the amount of membership you have built up and your pay when you leave, in the same way as for retirement.

The money is then held in the Scheme where it’ll be revalued every year in line with the Consumer Price Index, until it’s put into payment.

Eligible dependent children

This includes your own children, adopted children, and certain other children who depend on you financially. They must be under the age of 18 in order for a child's dependent pension to be paid. Or if they continue in full time education, or vocational training, the child's dependent pension can be paid up to the age of 23 (it will stop when they reach age 23). It can even cover some adult children who cannot work because of a disability.

Final pay

Normally this means the pay you received in the last year up to leaving that you pay pension contributions on.

Gainful employment

Gainful employment is defined in the Scheme rules as any type of paid work, for at least 30 hours a week over a period of at least 12 months.

Husband or wife

This means your legally married husband or wife. It doesn’t include a 'common law' husband or wife or someone you are living with as husband or wife.

Membership

Membership is used to work out your benefits and is based on how long you’ve been a member of the Scheme, plus any extra membership. For example, any money you transfer in from another pension scheme.

Normal Pension Age (NPA)

The NPA is the age from which you can retire and receive your pension in full. Your NPA in the LGPS is linked to your State Pension Age (SPA) with a minimum of age 65. You can check your NPA by looking up your current SPA at www.gov.uk/calculate-state-pension.

Part-time

You are part-time if you work anything less than the number of hours your employer classes as standard full-time hours.

Pensionable pay

This is the amount of pay on which you pay contributions. From 1 April 2014 it includes non-contractual (as well as contractual) overtime and any additional hours worked in excess of your contractual hours.

Rule of 85

The Rule of 85 was abolished on 1 October 2006, although some Scheme members contributing to the LGPS before that date may have some or all of their pension benefits protected under this rule. It is satisfied if your age and Scheme membership (in whole years) at the date you draw your benefits add up to 85 or more and is used to determine the earliest point at which benefits could be taken voluntarily from the LGPS without incurring an early retirement reduction.

State Pension Age (SPA)

This is the age you can take your State Pension. You can check your SPA at www.gov.uk/calculate-state-pension.