Glossary of terms for the FPS

The reduction or suspension of a pension in payment after re-employment. Where abatement applies and post-retirement pension plus relevant earnings exceed pre-retirement salary, any excess will be deducted (abated) from the pension in payment.

This rate is set out in a pension scheme’s regulations and determines how quickly a member’s pension grows. Most are written in the form of 1/n (where n is a figure such as 50 or 60) multiplied by pensionable pay and in those cases the smaller the n, the more valuable the rate is.

For example, the accrual rate for the FPS 2006 is 1/60.

Members who are working (in pensionable service) and building up pension benefits from that work. For example, a serving firefighter who has not opted out or retired on pension.

Available in the FPS 2015, members can buy additional amounts of pension by paying extra contributions.

Contracts available in the FPS 1992 and FPS 2006 allowing members to buy extra years of service, subject to meeting certain conditions.

A limit on an individual’s annual tax-relieved pension build-up. The standard allowance is £40,000 for most people but is subject to a tapered reduction for those on the highest incomes.

More information can be found at www.gov.uk/tax-on-your-private-pension/annual-allowance.

The tax charged at an individual’s marginal rate of income tax on pension built up above the annual allowance.

A defined benefit pension scheme that gives individuals a pension based on a percentage of the salary earned in each year of their working life. The annual “pot” is increased each year by a particular revaluation factor applied in that scheme.

The FPS 2015 is a CARE scheme.

A value placed on accrued pension rights in particular circumstances, such as when any worker ceases to be an active member of a scheme before pension is payable and wishes to transfer those pension rights to certain types of other pension scheme. A CETV can also be needed for divorce purposes.

Optional conversion of continuing pension at retirement into lump sum at a conversion rate offered by the pension scheme.

Commutation factors for the FPS are shown in the table below. The factor is applied to the part of the pension you give up to calculate the amount of the lump sum.

Annex ZA Firefighters’ Pension Scheme (England) Order 2006 - https://www.legislation.gov.uk/uksi/2015/590/schedule/2/paragraph/4/made 

An official measure of the cost of inflation, increasingly used for government purposes in recent decades. It examines some of the same things as RPI did, such as the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. CPI has been regarded as more accurately measuring changes in overall prices than RPI.

The value of pension benefits measured against the lifetime allowance. This is calculated by multiplying the annual pension by 20.regarded as more accurately measuring changes in overall prices than RPI.

The selected remedy to remove the unlawful discrimination identified by the court in the McCloud/ Sargeant ruling. Formerly unprotected members will be returned to their legacy scheme for the remedy period (2015 – 2022). At the point benefits are payable they will be able to choose legacy or reformed scheme benefits for the remedy period.

A member who has stopped building up benefits in the scheme, for example, after leaving employment covered by that scheme, or opting out of the scheme. No pension benefits have yet come into payment for the member from the scheme and the pension previously accrued is called a deferred or preserved pension.

An FPS deferred pension is normally payable from the ages shown in the table below.

A pension scheme where the pension is related to the members’ salary or some other value fixed in advance.

The Firefighters' Pension Schemes are DB schemes.

The percentage of the salary of employees that employers pay as a contribution towards their employees’ pension.

A type of defined benefit scheme that gives individuals a pension based on the number of years of pensionable service, the accrual rate and final salary as defined by the scheme.

Final salary scheme pension is any pension built up in the FPS 1992 or FPS 2006.

A government department responsible for providing actuarial advice to public sector clients.

The minimum pension that occupational pension schemes have to provide for those employees who were contracted out of the State Earnings-Related Pension Scheme between 6 April 1978 and 5 April 1997.

A type of pension available to a member who meets the relevant test in scheme regulations when they are unable to continue working due to ill health.

Indexation is a technique to adjust pension payments by means of an index. It most often refers to the indexation of pensions in payment in line with a prices index in order to maintain the purchasing power of the pension after inflation.

The public service pension schemes members were in before 1 April 2015. For example, the FPS 1992 or FPS 2006.

A limit on the total amount of tax-relieved pension build-up an individual can have without incurring a lifetime allowance charge.

More information can be found at www.gov.uk/tax-on-your-private-pension/lifetimeallowance.

The tax charged on an individual’s total pension build-up above the value of the lifetime allowance. An individual can either take this excess as a lump sum, in which case it is subject to a 55% tax charge, or as a regular pension payment, in which case the excess is subject to a 25% tax charge plus marginal rate income tax upon receipt.

A specific payment made in respect of a member’s pension rights. This can be the optional pension lump sum payable to a member when a retirement pension is brought into payment (often referred to as a pension commencement lump sum (PCLS)). Other lump sums are payable on events such as death.

The court cases of McCloud (in relation to judges) and Sargeant (in relation to firefighters) which established that age-based transitional protection in the reformed schemes amounted to unlawful age discrimination.

Age discrimination is treating employees or any other group of people less favourably because of their age. Age discrimination is unlawful unless it can be shown to be a proportionate means of achieving a legitimate aim.

The percentage of pensionable pay paid by active scheme members into their pension schemes.

The earliest age at which ordinary retirement benefits can be brought into payment for a member under the rules of that scheme, and subject to tax limits. Ill-health and survivor pensions are not subject to MPAs.

The MPA for the FPS 1992 is age 50 (with 25 years' service). The MPA for the FPS 2006 and FPS 2015 is age 55.

The reformed public service pension schemes introduced under the Public Service Pensions Act 2013. For example, the FPS 2015.

The age at which a pension scheme member can start taking pension benefits on a voluntary basis without any reductions. NPA is set in scheme rules.

NPA for the Firefighters' Pension Schemes is shown in the table below.

A pension which is provided via an employer.

The amount of an individual’s annual pension build-up that is tested against the annual allowance to determine whether that individual is required to pay an annual allowance charge.

For defined benefit schemes, such as the Firefighters' Pension Scheme, the PIA is the measurement of the increase in pension during the Pension Input Period (PIP) multiplied by a flat factor of 16.

Example

Annual pension at 6 April 2016 = £35,000

Annual pension at 5 April 2017 = £38,000

PIA = £38,000 - £35,000 = £3,000 x 16 = £48,000

This is the period over which the Pension Input Amount (PIA) is measured and is 6 April to 5 April for all pension schemes. Pension Input Period is commonly abbreviated to PIP.

Individuals who are drawing a pension and who are mainly former employees. However, they may also include widows, widowers and other dependants of former active members.

Proposed online systems to allow pension scheme members to see all their pensions in one place. The government is legislating to establish pension dashboards in the Pension Schemes Bill, which is currently before Parliament.

A protected member is somebody who was protected by law to stay in their existing legacy scheme (FPS 1992 or FPS 2006) and will not move into the reformed scheme (FPS 2015) until 1 April 2022.

A group of around 120 salary related occupational pension schemes, the 'Club' allows easier movement of staff mainly within the public sector. It does this by making sure that employees receive broadly equivalent credits when they transfer their pensionable service to their new scheme regardless of any increase in salary when they move to their new employment.

Pension schemes authorised by statute where the relevant ministers or officials make the rules of the schemes. The main schemes are those for civil servants, the armed forces, NHS employees, teachers, local government employees, the police and firefighters. There are over 200 public service pension schemes.

The reformed public service pension schemes introduced under the Public Service Pensions Act 2013. For example, the FPS 2015.

An information statement provided to members which shows the benefits accrued in the remedy period both as legacy scheme benefits and new scheme benefits.

The period during which age-related discrimination needs to be removed under the McCloud / Sargeant ruling - 1 April 2015 to 31 March 2022.

The old measurement of inflation but still published as it continues to be used to calculate price increases and indexation for certain purposes. Like CPI, RPI tracks changes in the cost of a fixed basket of goods over time, but the basket differs from CPI, as has the method of assessing overall inflation.

The revaluation order for the Firefighters' Pension Scheme is based on average weekly earnings.

The revaluation order is applied to the closing balance of the career-average pension on 1 April each year.

The Scheme Actuary for the FPS is the Government Actuary's Department (GAD).

An arrangement that can be used in certain circumstances where an individual's annual allowance charge is paid by their scheme and the individual's pension benefits are reduced appropriately to reflect this.

The scheme year runs from 1 April to 31 March.

A special member is a retained firefighter who was employed between 1 July 2000 and 5 April 2006, was unable to join FPS 1992, and made an election to join FPS 2006 during the 2014 options exercise.

A standard member is a member of FPS 2006 who is not a special member.

The age at which an individual can begin claiming their state pension. The ages vary between individuals with different birthdays.

You can calculate your State Pension age here: https://www.gov.uk/state-pension-age 

When an active or pensioner member dies, each scheme has a range of benefits that dependent children, a spouse, civil partner and sometimes an unmarried partner may receive instead.