Jargon Explained

Pensions can be a confusing subject, and can appear to be littered with jargon. This is an attempt to explain some of the terms most commonly used:

Actuary
An adviser on financial questions about the funding of pension schemes. Under the Pensions Act, trustees to a scheme have to appoint an actuary.

Average Retiring Salary
Your average retiring salary is the average of the best two consecutive years' normal salary in your last ten years' contributory membership before leaving or retiring. This is used for calculating your retirement pension.

Commutation
HMRC allows you to convert some of your pension to a lump sum. This is called commutation. The figure you are allowed will be computed individually, and depends on the pension you are to be paid.

Cumulative Disregard
The Disregard is the amount of salary on which you do not pay contributions. It was equal to 70% of the basic state pension for a married couple and was fixed at the value at the time pensionable salary was capped. It is pro rated if you are employed on a part-time basis.

Normal Salary
Normal Salary was your rate of salary on 1 January and 1 July. It was fixed at 30 April 2013.  It includes an allowance for shift supplements but any changes during a half-year are not recognised until the end.

Pensionable Salary
Pensionable Salary is your Normal Salary less the Disregard. This is used for calculating your contributions to the Scheme.

Pensions
This is the term used for Group Pensions Department, Pilkington Group Limited, which provides administrative and investment services to the Scheme's Trustee.

Pension Fractions
Your pension is built up at the rate of 1/60th unit or 1/80th unit per year of contributory membership, based on retirement at age 65. If you decide to draw your pension sooner, the fraction may be reduced to allow for the possibility of longer payment. For example:

For a 1/60th member

This 

Preserved Pension
The term given to the pension payable at age 65 if you cease to contribute to the Scheme before retirement, for instance if you leave the employment of Pilkington.

Pilkington Pension Scheme
The Pilkington Pension Scheme combined with the Scheme as of 1 July 1998. It was the pension scheme normally available to the Group's production workers.

State Pension Age
State Pension Age is the age at which State pension benefits are payable. This used to be 65 for men and 60 for women. The State pension age is currently 66 years for both men and women, however there are to be phased increases.

Minimum Retirement Age
This is the earliest age you are legally able to start taking your pension from the Scheme.  It is currently age 55.  It is due to increase to age 57 in 2028.