Glossary

50:50 Section

The 50:50 Section allows you to pay half your normal contribution into the Scheme for half the amount of pension. Your life cover and dependant benefits aren’t affected and if you need to retire because of ill health we’ll work out the ill health enhancement we add to your pension as if you’d been in the main section.

50:50 is useful for when things are difficult financially and is designed to be a short term option, meaning that you’ll be re-enrolled into the Main Section automatically at your next ‘auto re-enrolment’ date (usually within 3 years of joining the 50:50 Section).

Abatement

This may occur when a pensioner member who left before 1 April 2014 starts a new period of employment with a Fund employer who participates in the LGPS, other than one in which the member is eligible to belong to a teachers’ scheme. The pension fund may choose to temporarily reduce or stop your pension during your new employment. On leaving your new employment your pension will be reinstated in full.

Additional pension contributions

APC

APCs allow you to buy additional pension which is paid with your annual pension when you retire. You can buy additional pension by paying APCs regularly, over a period of time, or by paying in a one-off lump sum.

Additional voluntary contributions

AVCs

These are extra payments to increase a member’s future benefits. Members can also pay AVCs to provide additional life cover.

All local government pension funds have an AVC arrangement in which members can invest money through an AVC provider, often an insurance company or building society. AVCs are deducted directly from a member’s pay and can attract tax relief.

Administering authority

The administering authority runs the LGPS in accordance with the regulations made by the Ministry of Housing, Communities and Local Government and approved by parliament. The Environment Agency is the administering authority for the LGPS and has delegated the day to day administration of the LGPS to Capita.

Admission body

An admission body is an employer that chooses to participate in the Scheme under an admission agreement. These tend to be employers such as charities and contractors.

Adoption leave

To qualify, the employee must be newly matched with a child for adoption by an adoption agency, or have worked continuously for 26 weeks ending with the week in which they're notified of being matched with a child for adoption.

Ordinary adoption leave is the first 26 weeks and additional adoption leave is for up to a further 26 weeks, allowing the employee to take 52 weeks in total.

Annual allowance (AA)

AA

The annual allowance provides a measure of the amount your pension benefits are allowed to increase each year without being subject to an additional tax charge. The standard annual allowance is currently £40,000.

Assumed pensionable pay

APP

This provides a notional pensionable pay figure to ensure a member’s pension isn’t affected by any child related leave, reserve forces leave or reduction in pensionable pay due to a period of reduced contractual pay or no pay as a result of a sickness absence.

Authorised absence

An employee remains a contributing member during a period where they are absent from work with permission from their Scheme employer

Automatic enrolment

AE

The legal duty on an employer to enrol employees who meet certain criteria into a pension scheme that meets certain minimum quality requirements.

Automatic enrolment date

AE

The earlier of:

-   the day a member reaches age 22 provided they are earning more than £10,000 (2014/15 figure) a year in the job, or

-   the beginning of the pay period in which a member first earns more than £10,000 (2014/15 figure) in the job, on an annualised basis, provided they are aged 22 or more and under state pension age at that time.

Basic State Pension

BSP

An income paid by the government from state pension age. It's paid to people who have paid enough National Insurance contributions.

Beneficiary

Either a member who is entitled to benefits from the Scheme or their dependants who would become entitled if the member dies.

Career average benefits

CARE

The LGPS changed from a final salary scheme to a career average revalued earnings (CARE) Scheme on 1 April 2014.

Career average benefits are worked out annually using the pensionable pay you receive in the period 1 April to 31 March and then dividing by 49 (or 98 if you’re in the 50:50 Section). The amounts are added to your pension account each year and are revalued each 1 April to keep in line with the cost of living.

Cash equivalent transfer value

CETV

A CETV is a cash sum representing the value of your pension rights on a given date.

Civil partnership

A civil partnership is a relationship between two people of the same sex (civil partners) which is formed when they register as the civil partner of each other.

Closed Fund

The section of the EAPF that is no longer open to contributions.

Club transfer rules

Club transfer rules allow certain final salary occupational pension schemes, mainly public service pension schemes, to calculate transfers on special terms. The EAPF will provide you with further information on club transfers should this apply to you.

Cohabiting partner

A cohabiting partner is someone that you live with as a couple without being married. For a cohabiting partner to be eligible to receive a pension you must have been a contributing member after 31 March 2008 and for a continuous period of at least 2 years:

-    you and your cohabiting partner were free to marry each other or enter into a civil partnership

-    you and your cohabiting partner were living together as if you were married couple or civil partners

-    neither you and your cohabiting partner had lived with someone else as a married couple or civil partners

-    your cohabiting partner was financially dependent or interdependent on you

Consumer Prices Index (CPI)

CPI

The official measure of inflation of consumer prices in the United Kingdom. This is currently the measure used to adjust your pension account at the end of every Scheme year. The adjustment ensures your pension keeps up with the cost of living.

Contracted out

Prior to April 2016 the LGPS was contracted out of the State Second Pension (S2P). This meant that, before state pension age, you paid lower National Insurance contributions and the LGPS guaranteed to pay you a certain level of pension for being contracted out.

Contractual hours

For most employees, contractual hours mean the number of hours specified in their contract of employment of the Scheme.

Department of Communities and Local Government

DCLG

Death in service

When a member dies whilst employed and contributing to the EAPF.

Deferred benefits

Deferred benefits (also known as deferred pensions) are benefits that are held in the EAPF after you’ve stopped being a contributing member.

Dependant

Someone who is financially dependent on a member, such as a spouse or child.

Dependant’s pension

The pension payable to a member’s dependants.

Designating body

Designating bodies are bodies which can designate employees for access to the Scheme. Employees of town and parish councils, voluntary schools, foundation schools, foundation special schools, federated schools, technical institutes, Transport for London, and the Children and Family Court Advisory and Support Service, among others, can be designated for membership of the Scheme.

The EAPF currently has no employees from designating bodies taking part in the Scheme.

Discretion

This is the power given by the LGPS to enable your employer or the EAPF to choose how they will apply the Scheme in respect of certain provisions. They have a responsibility to act with ‘prudence and propriety’ in formulating their policies and must keep them under review. You may ask your employer or administering authority what their policy is in relation to discretion.

Environment Agency Pension Fund

EAPF

The Environment Agency Pension Fund (EAPF) is part of the Local Government Pension Scheme (LGPS). It offers pension and other benefits to employees and former employees of the Environment Agency.

Deferred and pensioner members before privatisation in 1989 formerly paid contributions to or received pensions from the Water Authorities Superannuation Fund which then became known as the ‘Closed Fund’.

Effective date

The date at which liabilities and assets of the EAPF are measured for valuation.

Eligible children

Eligible children are a member’s children (natural/adopted/step-child) and must meet the following conditions:

-    be under age 18, or

-    be aged 18 or over and under 23 and in full-time education or vocational training or

-    be unable to engage in gainful employment because of physical or mental impairment and either:

    - hasn't reached the age of 23, or

    - the impairment is, in the opinion of an Independent Registered Medical Practitioner, likely to be permanent and the child was dependent on you at the date of your death because of that mental or physical impairment.

Eligible job holder

An eligible jobholder is a worker who is aged at least 22 and is under state pension age and earns more than the annual amount of £10,000 (2014/15 figure).

Final pay

FP

This is usually the pay in respect of (i.e. due for) your final year of Scheme membership on which you paid contributions, or one of the previous 2 years if this is higher, and includes your normal pay, contractual shift allowance, bonus, contractual overtime (but not non-contractual overtime), maternity pay, paternity pay, adoption pay, and any other taxable benefit specified in your contract as being pensionable. If you’ve worked part time we’ll use the whole time equivalent of your pay to calculate your final salary benefits.

When we calculate your final pay we’ll only include the payments you received that were earned during the period we’re looking at. For example, if you’ve an arrears payment during the year we’re looking at and it was in respect of work done in a different year we won’t include it in our calculation as it was earned in a different year.

Final salary benefits

Before 1 April 2014, the LGPS was a ‘final salary scheme’. Final salary benefits are worked out by taking your service (in years and days) multiplied by 1/60 (or 1/80 for membership before 1 April 2008) and then multiplying this by your final pay.

Flexible parental leave

From 2015, parents will be able to choose how they share care of their child during in the first year after birth. Employed mothers will still be entitled to 52 weeks of maternity leave; however, working parents will be able to opt to share the leave.

Mothers will have to take at least the initial 2 weeks of leave following the birth as a recovery period.  Following that they can choose to end maternity leave and the parents can opt to share the remaining leave as flexible parent leave.

Gainful employment

This is defined as paid employment for not less than 30 hours per week for a period of not less than 12 months.

Guaranteed Minimum Pension (GMP)

GMP

The LGPS guarantees to pay a member’s pension that is at least as high as they would have earned had they not been contracted out of the state second pension (S2P) at any time between 6 April 1978 and 5 April 1997. This is called the Guaranteed Minimum Pension (GMP).

Illness or injury

An employee remains an active member during a period where they are absent from work with illness or leave due to injury.

In-house additional voluntary contributions (IHAVCs)

IHAVC

These are additional contributions that are made by a contributing member to a defined contribution plan with a provider that is appointed by the administering authority.

Independent financial adviser (IFA)

IFA

Independent financial advisers or IFAs are professionals who offer independent advice on financial matters to their clients.

Independent Registered Medical Practitioner (IRMP)

IRMP

An IRMP is registered with the General Medical Council and holds a diploma, or equivalent, in occupational health medicine and is part of the Faculty of Occupational Medicine, or equivalent body.

Lifetime allowance

LTA

The lifetime allowance (LTA) is the total capital value of all pension benefits you can have from all tax registered pension arrangements (not including any state benefits) without triggering an excess benefits tax charge.

The standard LTA is £1.03m for 2018/19.

Local Government Pension Scheme

LGPS

The LGPS (England & Wales) is a registered public service scheme under Chapter 2 of Part 4 of the Finance Act 2004. It achieved automatic registration by virtue of Part 1 of Schedule 36 of that Act. This means that tax relief is given on the contributions paid. It complies with the relevant provisions of the Pension Scheme Act 1993, the Pension Act 1995 and the Pensions Act 2004.

Lower Earnings Limit (LEL)

LEL

This is the amount of pay that you can receive before you pay any National Insurance contributions. The Lower Earnings Limit for 2014/2015 is £111 per week. It is usually increased annually by Parliament.

Maternity leave

Ordinary maternity leave lasts 26 weeks and additional maternity leave is for up to a further 26 weeks, allowing the employee to take 52 weeks in total.

Membership

This means the years and days you have contributed to the Scheme and is used to calculate your benefits.  For the calculation of final salary benefits, where a member is part time, membership is pro-rata based on the whole time equivalent hours worked.

Normal pension age (NPA)

NPA

Normal pension age is linked to your state pension age for benefits built up from April 2014 (but with a minimum of age 65) and is the age at which you can take the pension you have built up in full. If you choose to take your pension before normal pension age it will normally be reduced, as it’s being paid earlier. If you take it later than your normal pension age it’s increased because it’s being paid later.

Notional pay

NP

The pensionable pay earned in respect of final salary benefits, that would have been earned but for a relevant absence.

Occupational pension scheme

OPC

These schemes are also called company pension schemes. It’s a scheme set up by an employer to provide pension or death benefits for its employees.

Paternity leave

Ordinary paternity leave is up to 2 weeks and additional paternity leave is up to a further 26 weeks, if the mother/co-adopter returns to work.

Pension account

Each Scheme year the amount of pension you have built up during the year is worked out and this amount is added into your active pension account.

Pension credit member

A pension credit member is a deferred member of the LGPS as a result of a court ordered pension sharing order or an earmarking order following divorce or dissolution of a civil partnership. The ex-spouse/ex-civil partner is awarded a percentage of your benefits at the date of the court order which funds a benefit of entitlement in the LGPS.

Pension increase (cost of living increase)

PI

Pensions in payment and deferred pensions under the LGPS are increased by the pensions increase (review) order which from April 2011 is linked to the rise in the Consumer Prices Index (CPI). Increases before April 2011 were linked to the Retail Price Index (RPI).

From 1 April 2014 active member pension accounts will be increased by Treasury Orders which are currently linked to CPI, the major difference between Treasury Orders and Pension Increase Orders is that the Treasury Orders can be negative, leading to a reduction in your pension account.

Pension sharing order

A pension sharing order is issued by a court to split a member’s pension benefits following divorce or dissolution of a civil partnership. The ex-spouse or ex-civil partner of a member is awarded a percentage of the member’s benefits at the date of the court order which gives them an entitlement to a benefit in their own name in the LGPS.

Pensionable emoluments

A pensionable emolument refers to a payment of benefit which is classified as salary, wages or fees, but is specified in the member’s contract of employment as being pensionable (e.g. uniform allowance).

When calculating final pay, the emolument should only be included if it was earned in the final pay period irrespective of whether it was paid in such a period.

Pensionable pay

The pay on which you normally pay contributions, so your normal salary or wages plus any shift allowance, bonuses, overtime (both contractual and non-contractual), maternity pay, paternity pay, adoption pay and any other taxable benefit specified in your contract as being pensionable.

Permanently incapable (ill health)

This means that a member will, more likely than not, be incapable of doing the job for which they were employed until normal pension age at the earliest.

Public service pension scheme

A public service pension scheme includes a pension scheme covering civil servants, the judiciary, the armed forces, any scheme in England, Wales or Scotland covering local government workers, or teachers, or health service workers, or fire and rescue workers or members of the police forces; or membership of a new public body pension scheme.

Re-enrolment

If you opt out your employer will be required to re-enrol you into the LGPS approximately every three years on a set re-enrolment date. Your employer is required to do this because of a Government initiative called automatic enrolment which aims to help more people save for later life through a pension scheme at work, and they will have a set re-enrolment date.

Go to automatic enrolment to find out more.

Recognised trade disputes (strikes)

Any recognised trade dispute between employers and workers which is connected with the employment or non employment or the terms or conditions of or affecting the employment, of any person. An industrial action is any action which may affect the terms of a contract which is taken by workers acting together to compel their employer to accept or not to accept terms or conditions of or affecting employment.

Reduced likelihood

An ill health pension can only be awarded to a member if the likelihood of being immediately capable of undertaking gainful employment, because of that permanent incapacity, is reduced.

Relevant child related leave

Relevant child related leave includes periods of ordinary maternity, adoption or paternity leave (normally first 26 weeks) and any periods of paid additional maternity, adoption or paternity leave (normally after week 26 up to week 39).

Reserve forces service leave

This occurs when a Reservist is mobilised and called upon to take part in military operations. The period of mobilisation can range from under 3 months up to a maximum of 12 months. During a period of reserve forces service leave you will, if you elect to stay in the LGPS during that leave, continue to build up a pension based on the rate of assumed pensionable pay you would have received had you not been on reserve forces service leave.

Scheme manager

The Scheme manager is responsible for managing or administrating the Scheme. For the LGPS this is the Environment Agency Pension Fund (EAPF).

Scheme pays

If you exceed the annual allowance, you can ask the Fund to pay some or all of your annual allowance tax charge. This option is called a ‘scheme pays election'.

In return for the Fund paying your annual allowance tax charge, your pension benefits would be appropriately reduced which is known as a ‘scheme pays debit’.

Scheme year

The Scheme year runs from 1 April to 31 March each year.

Shared cost in-house additional voluntary contributions

SCIHAVC

Where a contributing member makes additional contributions to an IHAVC plan and the member’s employer may also contribute.

State Earnings Related Pension Scheme (SERPS)

SERPS

This is the extra earnings related part of the state pension that employed people could earn up to 5 April 2002. LGPS members were automatically contracted out of SERPS, and most paid lower national insurance contributions as a result. SERPS was replaced by the State Second Pension (S2P) from 6 April 2002.

State pension age

SPA

This is the earliest age you can receive the state pension. State pension age is currently age 65 for men. State pension age for women is currently being increased to be equalised with that for men and will reach 65 by 5 December 2018.

The state pension age will then increase from 65 to 66 for both men and women from 6 December 2018 to 5 October 2020 and from 66 to 67 between 2026 and 2028.

Under the current law, the State Pension age is due to increase to 68 between 2044 and 2046 though the government has announced it plans to bring this timetable forward meaning the State Pension age may increase to 68 between 2037 and 2039.

To find out your state pension age please visit www.gov.uk/calculate-state-pension

State Second Pension (S2P)

S2P

The State Second Pension (formerly SERPS) is the additional state pension, payable from state pension age by the Department for Work and Pensions. Initially, S2P was an earnings-related pension but from April 2009 it began building up as a flat rate pension.

LGPS members are contracted out of S2P and most pay lower National Insurance contributions as a result. More information on the State Second Pension (S2P) is available from the DWP Pensions Service.

Trivial commutation

If you have a small annual pension which is within HMRC limits, it may be possible to take it as a one off lump sum payment instead of receiving it as an annual pension. Tax will be applied to some of the lump sum before it is paid. Details will be provided if you’re eligible.

Visit the Gov.uk website to see an example on how Trivial commutation works.

Valuation

The Fund undergoes an actuarial valuation every 3 years. This is when the value of the Fund's investments and other assets is measured against its liabilities (the amount of pension it is expected to have to pay out).

Vesting period

The amount of time a new member has to have been in the Scheme to be entitled to a retirement benefit. The vesting period in the LGPS is 2 years.