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Accrual Rate
Active member
Actuarial Valuation
Actuary
Additional Voluntary Contributions (AVCs)
Adult dependant
Assets
Cash-Equivalent Transfer Value (CETV)
Deferred Member
Eligible children
Final-salary pension scheme
Full-time equivalent
Guaranteed Minimum Pension (GMP)
Irregular part-time employee
Liabilities
Lifetime allowance
Normal Pension Date
Pensionable Salary
Pensionable Service
Pensioner
Pensions (Increase) Act 1971
Registered Pension Scheme
Salary sacrifice arrangement
State pension age
State Earnings Related Pension Scheme (SERPS)
State Second Pension (S2P)
Accrual Rate
The rate benefits are built up – usually expressed as a fraction. In SAUL the Accrual Rate is 1/80th.
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Active member
A member of SAUL who is currently building up benefits in the Scheme. Active members are employed by a SAUL employer and contributing to the Scheme either directly from pay or as part of a salary sacrifice arrangement. This includes members on temporary absence or who have stopped contributing to SAUL on reaching 40 years Pensionable Service or reaching Normal Pension Date.
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Actuarial Valuation
A financial health check that compares the value of the assets held in the fund with the value of benefits promised to members – this is called the funding level. In SAUL an Actuarial Valuation takes place at least every three years.
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Actuary
A specialist adviser on financial matters, particularly those requiring complex calculations and projections. SAUL’s actuary independently assesses the financial position of the Scheme by examining the ability of SAUL’s assets to meet its liabilities. The actuary does this every three years, in a formal ‘actuarial valuation’, and by conducting funding reports in the intermediate years.
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Additional Voluntary Contributions (AVCs)
Extra contributions a member chooses to make in addition to their normal contributions, to build up extra pension benefits.
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Adult dependant
An adult who is financially dependent on a SAUL member, including where there is financial interdependence between the adult and the member.
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Assets
In SAUL, assets are the financial resources of the pension fund. The Trustee invests the assets to provide investment income and ensure that the fund is able to meet the Scheme’s liabilities. SAUL’s assets include:
- equities (company shares)
- government and company bonds (which provide a specified rate of interest)
- property
- alternative assets (such as commodities)
- cash
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Cash-Equivalent Transfer Value (CETV)
The amount that a member of a pension scheme is entitled to have transferred from a former pension scheme to another pension arrangement.
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Deferred Member
A member who has left SAUL, having built up benefits in the Scheme, but has not yet retired.
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Eligible children
Usually children who are:
- under age 18; or
- under age 23 and in full-time education or training; or
- at the date the pension becomes payable, unable to be self-supporting due to a permanent disability
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Final-salary pension scheme
A pension scheme which provides benefits based on your length of service and the highest yearly salary at, or near, the time you leave or retire. In SAUL your benefits are calculated using Pensionable Service and Pensionable Salary.
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Full-time equivalent
During periods of part-time service the full-time equivalent is used to calculate Pensionable Salary and Pensionable Service. The Pensionable Salary is increased to what it would have been if the member was in a full-time post. The Pensionable Service is decreased by the same proportion. This is so that when members change their part-time hours the Pensionable Salary figure is consistent because it always based upon the full-time salary.
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Guaranteed Minimum Pension (GMP)
Prior to 6 April 1997, occupational schemes could contract out of SERPS on a “Guaranteed Minimum Pension” (GMP) basis. This meant that SAUL had to guarantee to provide a pension of a certain minimum level for pension built up before this date. In broad terms, the GMP is equivalent to the benefits the member would have received from SERPS had they not contracted out.
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Irregular part-time employee
An employee whose contract states neither regular hours of work nor an annual salary paid evenly throughout the year.
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Liabilities
In SAUL, the amount needed to pay member’s benefits as set out in the SAUL Rules.
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Lifetime allowance
The maximum value of all pension arrangements (excluding state benefits) that may be accumulated without incurring additional tax.
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Normal Pension Date
In SAUL the last day of the month before a member’s 65th birthday. The proposals to make changes to SAUL say that Normal Pension Date for members joining from 1 July 2012 will be linked to increases in state pension age.
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Pensionable Salary
The higher of:
- the highest salary paid over any one of the three years before the member retires, leaves or dies; and
- the highest yearly average of salary in any three consecutive years during the 13 years before the member retires, leaves or dies.
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Pensionable Service
The length of time in years and days the member has contributed to SAUL including service credits purchased by paying Additional Voluntary Contributions, or resulting from a transfer-in from another scheme.
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Pensioner
A SAUL member, or dependant of a SAUL member, who is receiving pension payments from the Scheme.
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Pensions (Increase) Act 1971
Defines how public-sector pensions increase - which is based upon the September to September increase in prices. Under the SAUL Rules pensions are increased in accordance with this Act.
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Registered Pension Scheme
A pension scheme that is approved under the provisions of the Finance Act 2004. This means that the scheme, employers and members have the benefit of significant tax concessions.
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Salary sacrifice arrangement
Where a member agrees with the Employer to reduce their salary in exchange for a non-cash benefit. In SAUL’s case members can agree with their employer to reduce their salary by 6%. The employer then pays the 6% (equivalent to an employee contribution) directly to SAUL.
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State pension age
The age at which State pension comes into payment. This is currently 60 for women and 65 for men. State Pension Age for women is to be raised to 65 for women. This is being phased in over a ten-year period, starting in 2010. Women born before 6 April 1950 are not affected by the change. The age at which Guaranteed Minimum Pensions (GMPs) become payable for women will remain age 60.
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State Earnings Related Pension Scheme (SERPS)
The additional State pension payable on top of the basic State pension, for those who have earned more than a given minimum for certain minimum periods of time. This was available until 5 April 2002 when it was replaced by the State Second Pension (S2P).
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State Second Pension (S2P)
The additional State pension, payable on top of the basic State pension, which replaced the State Earnings-Related Pension Scheme (SERPS) from 6 April 2002.
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