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
The Inland Revenue 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 earnings, length of service and retirement age.
Cumulative Disregard
The Disregard is the amount of salary on which you do not pay contributions. It is equal to 70% of the basic state pension for a married couple. It is adjusted in July and is pro rated if you are employed on a part-time basis. The Cumulative Disregard is the sum of the Disregards that applied over the time you paid contributions to the Scheme.
Normal Salary
Normal Salary is your rate of salary on 1 January and 1 July. It includes an allowance for shift supplements but any changes during a half-year are not recognised until the end.
Pensionable Salary
Set in January and July, 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 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:
|
Age
|
63
|
60
|
58
|
55
|
52
|
50
|
|
(1/60)
|
(1/65)
|
(1/73)
|
(1/82)
|
(1/91)
|
(1/97)
|
* The figures above are for illustrative purposes only. Early reduction factors are set by the actuary to maintain the expected value of your pension.
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 is currently 65 for men and 60 for women. However, for women born after 5 April 1950, State Pension Age will gradually be increased to 65. Women born after 5 April 1955, will have a State Pension Age of 65.