Glossary

 

  • Actuarial Reduction

    This reduction, determined by the Board, is applied to your compensation if you start receiving payments from us before your Normal Pension Age (NPA).

  • Accrual rate

    The rate at which pension benefits build up for members in defined benefit (DB) schemes. The accrual rate is the proportion of your salary that would be awarded as pension for each year you were a member of a DB scheme. Accrual rates are usually expressed as fractions such as 1/60th or 1/80th.    

  • Active member

    A member of a pension scheme who’s currently accruing pensionable service.

  • Assessment Date

    The date at which an employer with a defined benefit pension scheme goes bust.

  • Assessment period

    During this time, the PPF investigates whether it can assume responsibility for a scheme. The assessment period starts at the assessment date which can be found on your statement of compensation entitlement.

  • Assets

    Everything that the trustees hold for the pension scheme. This can include investments, bank balances and any amounts owed to the scheme.

  • Admissible rules

    Rules of the former pension scheme after the application of a statutory test.

  • Attachment order

    An order made by the court as part of a financial settlement on divorce or dissolution of a civil partnership. It earmarks part of the member’s pension, which means part of their compensation will become payable to their ex-spouse or former civil partner when the member retires.

  • Beneficiary Claim form

    A form to be completed after a member’s death to provide information to the PPF about any spouse, civil partner, relevant partner or eligible children who may be entitled to receive compensation following the member’s death.

  • Beneficiary member

    Also known as a survivor compensation member. The spouse, civil partner or relevant partner of a member who’s receiving compensation following the member’s death.

  • Benefit modeller

    This is a functionality on the member website that allows certain registered members to get an estimate of their compensation at different ages with different lump sum percentages up to and including the maximum available.    

  • Benefit statement

    The online benefit statement is available to registered members. It’s an estimate of your compensation at your Normal Pension Age, ignoring future inflation. It’s based on the information we hold about you at the date of calculation.    

  • Board of the Pension Protection Fund

    A statutory body established under the provisions of the Pensions Act 2004. The PPF became operational on 6 April 2005.

  • Cash Equivalent Value (CEV)

    In order to provide the court with the necessary information during divorce proceedings or the dissolution of a civil partnership, there must be a valuation of your compensation entitlement which is known as a Cash Equivalent Valuation (CEV).     

  • Child compensation member

    The child of a deceased member who’s receiving compensation following the member’s death.

  • Civil partner

    An individual in a civil partnership with the member under the Civil Partnership Act 2004.

  • Civil partnership

    A relationship between two individuals registered under the Civil Partnership Act 2004.            

  • Compensation

    If the PPF has assumed responsibility for a scheme, it will make compensation payments to the scheme’s members. These payments replace the scheme pension benefits in accordance with the Pensions Act 2004.

  • Compensation cap

    There is a statutory limit on annual compensation that anyone under Normal Pension Age (NPA) at assessment date will be tested against.

  • Compensation commencement lump sum

    A tax-free lump sum derived by reducing the amount of annual compensation.    

  • Compensation credit member

    As a result of a Compensation Sharing Order you’ll become entitled to a share of your ex-spouse or former civil partner’s compensation. When the Compensation Sharing Order is implemented you too will become a member of the PPF (known as a compensation credit member).

  • Compensation payment

    Payments of compensation made by the Board.

  • Consumer Prices Index (CPI)

    The general index of consumer prices published by the Office of National Statistics. The increases to PPF compensation in deferment and payment for certain periods of service are linked to CPI. Please see our FAQs for further details.

  • Deferred compensation

    As long as you aren’t already receiving part of your entitlement, you can put off receiving payments up until the age of 75.

  • Defined Benefit (DB) scheme

    A pension scheme where scheme members are promised a set amount of benefit, for example where benefits are worked out in line with their length of service and salary.       

  • Defined Contribution (DC) scheme

    See Money Purchase Scheme.    

  • Deferred member

    A PPF member who isn’t receiving compensation yet.

  • Early retirement

    This means you’re taking your compensation at an earlier date than your Normal Pension Age. Your payments will be decreased to take into account the fact that they’re being paid earlier.

  • Eligible child

    The natural child (born or being carried by the mother at date of death) of the member, an adopted child, or a child who was dependent on the member at date of their death and who’s:

  • Employer

    The company that employed you while you were in pensionable service for your former pension scheme.

  • Ex-spouse

    An individual who was previously married to a PPF member.

  • Former civil partner

    An individual who was previously in a civil partnership with the member.

  • Former pension scheme

    The member’s pension scheme for which the PPF assumed responsibility.

  • Independent trustee

    A trustee who has no connection to the scheme, the employer or members. Independent trustees may well be appointed to a scheme when the employer is bankrupt.

  • Indexation

    The way in which payments may be adjusted with reference to changes in the Consumer Prices Index (CPI) to take into account of inflation.    

  • Insolvency event

    A qualifying insolvency event must happen to a company before its scheme can be considered for the PPF.

  • Late retirement

    This is when you decide to start receiving your compensation payments later than your Normal Pension Age. Your payments will then be increased to take into account the fact that they’re being paid later.

  • Liabilities

    Amounts that a pension scheme will have to pay now and in the future. The most common liability is paying pensions.

  • Long Service Cap

    A member with 21 years or more pensionable service in their former scheme will have a higher compensation cap applied if they are under Normal Retirement Age at the Assessment Date.

  • Money Purchase Scheme

    Also known as defined contribution schemes. Money purchase "pension pots" are made up of member and employer contributions (if applicable) plus investment returns and tax relief, and are used to purchase an annuity. Benefit levels are not guaranteed.

  • Nomination form

    A form for the member to complete to provide information to the PPF in respect of a relevant partner.

  • Normal Pension Age (NPA)

    The age under the admissible rules of the former pension scheme at which the member was entitled to payment of their pension without actuarial adjustment, disregarding any special provision for early payment.

  • One Time Code (OTC)

    This is a six digit code that is sent to either your mobile phone or landline as an additional security measure during the registration, login and forgotten password processes. The code can only be used once and you’ll receive a different one every time.

  • Payment confirmation certificate

    This is the document sent to pensioner members with the Welcome pack letters.

  • Pensioner

    A scheme member who’s currently receiving a pension from the scheme.

  • Pensioner member

    A member who’s receiving compensation from the PPF and isn’t a vested member.

  • Protected pension age

    You have to be 55 years old or over to retire early, unless you have the right to take your pension earlier under the rules of your former pension scheme (known as their protected pension age).

  • Qualifying disability

    A child aged 18 or over can still be eligible to receive compensation (up to the age of 23) if they cannot undertake full time paid employment due to a disability which is covered by the Equality Act 2010.

  • Qualifying education

    A child aged 18 or over can still be eligible to receive compensation (up to the age of 23) if they’re in full time education. They will need to confirm their eligibility each year until they no longer qualify.

  • Relevant partner

    Someone of either sex who you aren’t married to, nor in a civil partnership with, but whom you live with as if you were.

  • Retirement illustration

    When you’re nearing your date of retirement, you might want to know how much compensation you’ll receive from us. We’ll help you figure that out with an illustration.

  • Retirement forecast

    If you’re not about to retire just yet, but do want to get an estimate of what your future compensation might look like, you can request a forecast.

  • Revaluation

    Increases in deferred compensation.

  • Separate scheme lump sum (SSLS)

    Defined non-commutable lump sum provided by the admissible rules in addition to compensation. A member who was entitled to a SSLS in their former scheme is not able to commute any of their compensation to add to their lump sum.   

  • Scheme Delivery Associate

    The PPF employee assigned to work with the trustees of schemes as they progress through the assessment period.  

  • Spouse

    A person married to a member of the PPF.

  • Stand Alone Lump Sum (SALS)

    Before 6th April 2006 members of some pension schemes were able to be awarded benefits entirely in the form of a lump sum, with no accompanying entitlement to an annual pension. The right to a SALS is retained by a member providing they do not accumulate any benefits in the scheme after that date. A SALS must be paid as one single payment.    

  • Statement of compensation entitlement

    A statement that details your entitlement to compensation from the PPF.

  • Statement of early compensation entitlement

    Statement that details the level of compensation which would be payable if you chose to retire before your Normal Pension Age.

  • Survivor’s compensation

    The compensation that’s paid to a spouse, civil partner or relevant partner following the member’s death.

  • Survivor compensation member

    Also known as a beneficiary member. The spouse, civil partner or relevant partner of a member who’s receiving compensation following the member’s death.

  • Terminal ill health payment

    A terminal ill health payment is a lump sum payment generally equal to two times the annual compensation the member would be entitled to, were they to retire.    

  • Trustee

    A person or company responsible for administering the assets and liabilities of a pension scheme.

  • Vested compensation member

    A vested – or mixed compensation – member is already receiving part of their compensation, while another part of their entitlement is still due to commence.

  • Welcome pack

    A personal information pack detailing the compensation you’ll receive from the PPF when we’ve assumed responsibility for your former pension scheme.

 

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