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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
Abatement:
The reduction in pension (possibly to zero) during a tax year that may happen if a pensioner becomes re-employed after taking pension benefits in full.
Accrual Rate:
In a defined benefit scheme pension benefits build up at a defined rate, known as the accrual rate.
Actuary:
Is an independent person who is professionally qualified to give advice as to the financial position of the scheme.
Actuarially Reduced Pension (ARP):
Retirement benefits paid from age 55 and before the NPA of 60 (existing scheme member) or 65 (new entrant) reduced by a factor related to the scheme member’s age on the date the pension commences.
Additional Pension:
The facility for scheme members (or their employer on their behalf), to buy additional annual pension of up to £5,000 per year at retirement.
Additional Voluntary Contributions (AVC):
Voluntary contributions that scheme members may pay to an AVC provider to provide an annuity in retirement. There are two types of AVCs: in-house or free-standing. The STSS in-house AVC provider is Prudential. Free-standing AVCs are paid to an AVC provider of the scheme member’s choice.
Age Retirement:
Retirement on or after the scheme’s Normal Pension Age (NPA) of 60 or 65, as appropriate.
Civil Partner:
A person who has entered into a civil partnership with his or her same-sex partner.
Commutation of Pension to Retirement Lump Sum:
The option to give up £1 of pension in return for £12 of (tax-free) retirement lump sum up to a maximum of 25% of the overall pension value.
Contracting Out:
Members of the STSS are contracted out of the State Second Pension Scheme (S2P).
Contributions Equivalent Premium (CEP):
A payment to the National Insurance Contributions Office (NICO) HMRC to reinstate the scheme member into the State Second Pension Scheme (S2P) when contributions are repaid or a transfer value is paid to another scheme unable or unwilling to accept the S2P liability.
Death Grant:
Lump sum payment of three times pensionable salary paid when a scheme member dies while in pensionable employment.
Deferred Scheme Member:
A scheme member who has left pensionable employment before NPA having completed the qualifying period necessary for payment of retirement benefits and whose benefits remain to his or her credit in the scheme.
Earnings Cap:
A limit applied to the contributory salary of certain scheme members who are high earners.
For the current earnings cap contact SPPA.
Existing Scheme Member Service:
Reckonable service that carries an NPA of 60. This includes post 31 March 2007 reckonable service and reckonable service accrued on or before 31 March 2007 by a person who has not had a relevant break in service.
Family Benefits:
Long-term and short-term pension payable to surviving children of the scheme member and either: a surviving widow or widower, a civil partner, a financially dependent unmarried partner or financially dependent same-sex partner where the relationship is not a registered civil partnership.
Free Standing Additional Voluntary Contributions:
See Additional Voluntary Contributions.
Gainful Employment:
Any employment which demonstrates that a person’s ability to carry out any work is no longer impaired by at least 90%.
Guaranteed Minimum Pension (GMP):
The pension that would have been earned if a person had been contracted in to SERPS during the period 6 April 1978 and 5 April 1997. Schemes that contracted out of SERPS guaranteed to pay benefits at least as good as the GMP.
In-House AVCs:
See Additional Voluntary Contributions.
Internal Dispute Resolution Procedure (IDRP):
The formal process through which scheme members or their beneficiaries have the right to appeal against any decision made by the administrators or managers of the scheme.
Lifetime Allowance (LTA):
Is the amount set by HMRC on total pension saving payable from a scheme before an additional tax becomes payable. This is set at £1.6m in tax year 2007/08.
Minimum Pension Age (MPA):
The earliest age at which retirement benefits (excluding ill-health retirement benefits) can be paid from the STSS (age 55 for post 30 June 2006 entrants, age 55 from 2010 for existing members).
New Entrant Service:
Reckonable service that carries a NPA of 65. This includes: post-31 March 2007 reckonable service accrued by a person who (i) enters pensionable employment for the first time on or after 1 April 2007, or (ii) re-enters pensionable employment after 1 April 2008 after a Relevant Break in service.
Nominated Dependant:
An adult relative of an unmarried scheme member who has been nominated to receive a survivor pension on the death of the scheme member. This only applies to certain relatives and payment of the pension is subject to a financial dependency test.
Normal Pension Age (NPA):
The earliest age (age 60 for existing scheme member rights or age 65 for new entrant rights) at which a scheme member can take their unreduced retirement benefits.
Opting Out:
The facility for a person to formally opt out of pensionable employment.
Partial Incapacity Benefit (PIB):
(post 31 March 2007) immediate payment of unreduced retirement benefits awarded on grounds of permanent incapacity for teaching, but capable of other gainful employment (See also Total Incapacity Benefit).
Pensionable Employment:
Employment that is pensionable in the STSS.
Pensionable Salary:
The salary used for calculating retirement benefits and Death Grant.
Pensions Increase:
Annual increase applied to deferred scheme benefits and pensions in payment.
Phased Retirement:
The opportunity for members to drawdown up to 75% of their pension benefits whilst reducing their earnings by at least 25% for a minimum of one year.
Premature Retirement (PRC):
Immediate payment of unreduced retirement benefits to scheme members aged 50 or over (55 or over if first joined the STSS on or after 30 June 2006) but under 60 and the employer certifies that his employment was terminated by reason of redundancy or in the interests of the efficient discharge of the employer’s functions.
Qualifying Period:
The period (usually two years) a scheme member must complete in order to qualify for the award of retirement benefits.
Qualifying Service:
Service that counts towards the qualifying period that a scheme member needs to complete to be entitled to retirement benefits.
Reckonable Service:
Service that counts in the calculation of retirement benefits.
Re-Employment:
Employment following retirement.
Re-Instatement:
Payment back to the scheme of contributions (plus interest) withdrawn from the STSS before 1 June 1973.
Retirement Age:
The age at which a person retires from his employment.
Retirement Benefits:
Pension and (tax-free) lump sum payable subject to completion of a qualifying period and other conditions depending on the type of retirement.
State Earnings Related Pension Scheme (SERPS):
The second tier of the state pension arrangements between 6 April 1978 and 5 April 2002.
State Second Pension (S2P):
The second tier of the state pension arrangements from 6 April 2002.
Surviving Partner Benefits:
The term used to cover pension payable on the death of a scheme member to the surviving widow, widower, civil partner, financially dependent unmarried partner or financially dependent same-sex partner where the relationship is not a registered civil partnership.
Total Incapacity Benefit (TIB):
(post 31 March 2007) additional ill-health retirement benefits awarded to scheme members permanently incapacitated for teaching and not capable of gainful employment.
TPAS:
The Pensions Advisory Service (formally OPAS). An independent voluntary organisation that provides information and guidance to members of the public, covering State, company, personal and stakeholder schemes.
Transfer-In:
The acceptance of a transfer value from another pension scheme that is used to purchase reckonable service in the STSS.
Transfer-Out:
Payment of a transfer value to another pension scheme that extinguishes pension rights in the STSS.
Transfer Value:
The actuarial value of a scheme member’s accrued benefits in the STSS payable to another pension scheme able and willing to accept the transfer value.