Accrual rate
The formula used to describe the rate at which you build up pension benefits as a member of the Local Government Pension Scheme (LGPS). The term is used in both the final salary and CARE elements of the scheme. Your accrual rate is expressed as a fraction (for example, 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
Additional Voluntary Contributions, or AVCs, are extra payments made to increase your future benefits. You can also pay AVCs to provide life cover. All LGPS pension funds have an AVC arrangement, Surrey Pension Fund's AVC provider is Prudental LTD. AVCs are taken directly from your pay and attract tax relief.
Admission body
An admission body is an employer that chooses to participate in the LGPS under an admission agreement. Admission bodies tend to be employers such as charities and contractors.
Arrears
If someone is paid in arrears, they are paid at the end of the period of time during which the money was earned or due. Salaries, for example, are paid in arrears.
Automatic enrolment
Automatic enrolment is a work-based pension requirement introduced by the Government from October 2012 onwards. Workers can opt out at any time, but may be subject to re-enrolment every three years from the date the employer was first required to comply with the new rules.
Your automatic enrolment date is the earlier of:
- the day you reach age 22, if you are earning more than £10,000 a year
- the beginning of the pay period in which you first earn more than £10,000 a year, as long as you are over age 22 and under State Pension age at the time.
Automatic enrolment will only affect you if you are employed by an LGPS Scheme employer, but you are not paying into the LGPS. See the section on Automatic enrolment on the LGPS Member website for more information.
Civil partner
This means a person who you have formed a civil partnership with.
Club transfer
Club transfer rules allow certain pension schemes to calculate pension transfers on special terms. Most public service pension schemes operate club transfers. See our page on Transferring in for more information.
Consumer Prices Index (CPI)
The Consumer Prices Index, or CPI, is the official measure of inflation in the UK. CPI is currently the measure that is used to adjust your pension account at the end of every Scheme year when you are an active member. Every April, CPI is also used to increase the value of any LGPS deferred pensions and pensions in payment. This adjustment makes sure that the value of your pension account, deferred pension or pension in payment keeps up with cost of living.
Contracting out
From 6 April 1978 to 5 April 2016, the LGPS was contracted out of the State Earnings Related Pension Scheme, known as SERPS, and the State Second Pension (S2P). This meant that most LGPS members paid reduced National Insurance contributions in this period. From 6 April 2016 onwards, members of the LGPS have not been "contracted out" and have been paying the full rate of national insurance contributions. The amount that you pay will depend on your salary.
Deferred benefits
When you leave an LGPS Scheme, your benefits are worked out based on the amount of membership you have built up and your pay when you leave. They are then held in the Scheme where they increase in value every year in line with the cost of living, until they are put into payment.
Designating body
Designating bodies are employers that can designate employees for access to the LGPS. The main types of designating bodies are listed on the LGPS Member website.
Discretion
The power given by the LGPS to choose how to apply the Scheme rules in certain situations. Both your employer and pension fund have the power to exercise different discretions.
Eligible dependent children
This includes your own children, adopted children, and certain other children who depend on you financially. They must normally be under 18, but can be as old as 23 if they carry on in full time education. It can even cover some adult children who cannot work because of a disability. A full list of criteria can be found on the LGPS member website.
Eligible cohabiting partner
An eligible cohabiting partner is a partner you are living with who, at the date of your death, has met necessary conditions for a continuous period of at least two years. A full list of criteria can be found on the LGPS member website.
Eligible jobholder
An eligible jobholder is a worker aged between 22 and State Pension age who earns more than £10,000 per year.
Final pay
The figure used to work out final salary benefits in the LGPS. Final pay is usually the pay due for your final year of Scheme membership. Pay for one of the previous two years can be used if it is higher.
Flexible benefits
Ways that members of defined contribution pension schemes can take money from their pension pots after age 55. The LGPS is not a defined contribution pension scheme.
Gainful employment
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.
Guaranteed Minimum Pension (GMP)
Members of the LGPS between 6 April 1978 and 5 April 1997 who paid reduced National Insurance contributions. They didn't pay into the State Earnings Related Pension Scheme, or SERPS. The LGPS guarantees to pay you a pension at least as good as you would have received from SERPS. This is called the Guaranteed Minimum Pension or GMP.
Husband or wife
Your legally married husband or wife. It does not include a 'common law' husband or wife or someone you are living with as husband or wife, see eligible cohabiting partner.
Membership
Membership is used to work out your benefits. It is based on how long you have been a member of the Surrey Pension Fund Scheme, plus any extra membership, for example any you transfer in from another pension scheme.
Normal pension age
The age from which you can retire and receive your pension in full without reduction. It is linked to your State Pension age, but with a minimum of age 65. If you choose to take your pension before your Normal Pension Age (NPA), it will normally be reduced because it is being paid early.
You can check your normal pension age by looking up your current State Pension Age.
Occupational pension scheme
An occupational pension scheme, also called company pension schemes, is a scheme set up by an employer to provide pension or death benefits for its employees.
Part time
You are part time if you work anything less than the number of hours your employer classes as standard full time hours.
Pension credit
A share of an ex-spouse's or ex-civil partner's pension benefits. A pension credit is awarded by a Court under a Pension Sharing Order or by a qualifying agreement in Scotland following a divorce or dissolution of a civil partnership.
Pensionable pay
Pensionable pay is the amount of pay on which you pay contributions. It includes basic pay, plus some other extras such as bonuses, shift allowances and voluntary overtime. It does not include things like mileage or expenses. A full list of what and what doesn't count as pensionable pay can be found on the LGPS member website.
Rule of 85
The Rule of 85 (also known as the 85 year rule) is a formula used to determine the earliest point at which benefits could be taken voluntarily from the LGPS without suffering an early retirement reduction. The rule is satisfied if your age and scheme membership (in whole years) at the date you draw your benefits add up to 85. It was abolished on 1st 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. As it is quite complicated, we suggest that you contact us if you think it may apply to you.
State pension age
The earliest age you can draw your State pension. The State Pension age was equalised at 65 for men and women in 2018 and increased to 66 in 2020. Under current legislation the State Pension age is due to rise to 67 between 2026 and 2028 and to 68 between 2044 and 2046. You can check your state pension age on the GOV.UK website.
Underpin
When the LGPS changed to a career average scheme in 2014, older Scheme members were protected from the changes. This protection is known as the underpin. The underpin makes sure that protected members get a pension that is at least as good as they would have received if the Scheme had not changed on 1 April 2014. Find out more about when the underpin applies.
Vesting period
The vesting period is the length of time that you must be an active member of the LGPS to qualify for benefits in the Scheme. The vesting period in the LGPS is two years. You can meet the vesting period with less than two years' membership in certain circumstances. Find out more about vesting periods which are listed here.
Workplace pension reform
The workplace pension reforms came into effect in October 2012. Phased in over a number of years from that date employers will have to automatically enrol eligible workers into a qualifying pension scheme which meets certain criteria and make minimum contributions towards their retirement savings. This is popularly known as automatic-enrolment.