How CARE works

On the day on which you become a member of FPS 2015, a pension account will be opened for you and it will remain open for as long as you are a contributing member of the Scheme. This is called an "active member's account".

If you are an active member in more than one employment at the same time, you will have an active member's account for each employment.

At the end of every scheme year (1 April to 31 March) your active member's account will be credited with an amount of earned pension.

The amount of earned pension credited is:

1/59.7 of the pensionable pay you receive during that scheme year, plus
1/59.7 of the assumed pensionable pay you can count for that scheme year.
If a transfer value payment is received from another pension your account would be credited with an amount representing that transfer value, in the scheme year in which it is received.

Let's suppose your pensionable pay plus any assumed pensionable pay during your first scheme year is £29,850. Your earned pension for that year would be:

1/59.7 x £29,850.00 = £500.00

To this would be applied an "index adjustment". This would be a percentage increase or decrease specified in an Order issued by HM Treasury, reflecting any national change in average weekly earnings. It is applied to ensure that the pension which you hold in your account each year maintains its value on a year by year basis.

For example, if the relevant Treasury Order specified an increase of 3%, this would be applied to your first year pension:

£500.00 + (3/100 x £500.00) = £500.00 + £15.00 = £515.00

and so the opening balance of pension in your active member's account at the start of the second scheme year would be £515.00

A similar process would take place in the second year. Suppose your pensionable pay plus any assumed pensionable pay in the second year is £30,447.00. Your earned pension for the second scheme year would be:

1/59.7 x £30,447.00 = £510.00

This would be added to the opening balance of £515.00 to provide a total earned pension of

£515.00 + £510.00 = £1,025.00

at the end of the second year.

Again this would have the index adjustment applied – let's say it is 4% for the second year:

£1,025.00 + (4/100 x £1,025.00) = £1,025.00 + £41.00 = £1,066.00

and so the opening balance of pension in your active member's account at the start of the third scheme year would be £1,066.00.

Your active member's account would continue to build in this way for so long as you remain an active member of the Scheme. Also, if you were to remain an active member beyond the Scheme's normal pension age (60), an "age addition", i.e. an additional amount of pension, calculated in accordance with the guidance of the Scheme actuary, would be added.

If you cease to be an active member before becoming entitled to immediate payment of pension, your active member's account would be closed and your accrued earned pension transferred to a "deferred member's account"