Commonly searched definitions

A

Accrued Benefits

The pension benefits that the pension Plan member has already built up.

Active Member

A member of a pension plan who is building up pension benefits from their current employment.

Actuarial factors

These are factors that help us calculate your benefits. They’re produced by our Scheme Actuary and are based on close analysis of statistics and risks.

Additional State Pension

The Additional State Pension – also known as the State Earnings-Related Pension Scheme (SERPS) and the State Second Pension – is money that the Government pays you on top of your Basic State Pension if you reached retirement age before 6 April 2016. It’s automatically paid with your Basic State Pension if you’re entitled to it.

You won’t get the Additional State Pension if you reached State Pension age on or after 6 April 2016. You’ll get the New State Pension instead.

Administrator

The people/Company appointed by the Trustee to be responsible for managing the pension plan on a day to day basis.

Adult dependant

This is an adult who depends totally or partly on financial support from you. If you don’t have a spouse/civil partner, and if the Trustee agrees, you can nominate an adult dependant to benefit from your pension when you die.

Annual Allowance

The Annual Allowance is how much you can put into a Defined Contribution (DC) scheme each year, or build up in a Defined Benefit (DB) scheme, before you start paying tax on your benefits. It’s currently £40,000. All the money that goes into all your pension schemes counts towards your Annual Allowance.

Annuity

A regular, guaranteed income for life or a fixed number of years. The annuity we offer through BTPS is guaranteed for life. We don’t offer a fixed-term annuity. Once you’ve chosen a lifetime annuity, you normally can’t change your mind.

B

Basic State Pension

If you reached State Pension Age before 6 April 2016 (65 for men, 63 for women) you get the Basic State Pension. To get the full amount, you must have 30 qualifying years of National Insurance contributions or credits.

BT

British Telecommunications plc. ‘BT’ also includes any subsidiary or associated company that employs members of the BTPS.

C

Career Average Revalued Earnings (CARE)

On 1 April 2009, BTPS changed from a Final Salary pension scheme to a CARE scheme.

In a CARE scheme, you build up a block of benefits each year, based on your Pensionable Salary for that year. Each block increases each year in line with the Retail Prices Index (RPI) or with your Pensionable Salary, whichever is lower. Then we add all the blocks together to give your total CARE pension and CARE lump sum.

Each block of pension is equal to 1/80th or 1/90th of your Pensionable Salary. Your tax-free lump is 3/80ths or 3/90ths of your Pensionable Salary for each year you're in the scheme.

Cash Equivalent Transfer Value (CETV)

A cash amount that broadly reflects the total value of all your BTPS benefits. To work it out we look at:

  • The annual amount you’re entitled to (based on your salary at BT and your length of time in the Scheme).
  • Benefits that we might pay in future – like a spouse’s or dependant’s pension.
We also factor in other things like your age and current market conditions. That means your CETV could change over time and might go down as well as up.

If you decide to take a CETV, we’ll pay it directly into another pension scheme you have. You’d give up all your benefits in the BTPS for good.

If you have an AVC fund, you can also transfer this into another pension scheme, either separately before you retire or along with your CETV.

CIFO

Channel Islands Financial Ombudsman.

Civil Partner

A partner of the same or opposite sex who, under the Civil Partnerships Act 2019, has entered into a legal partnership with you.

Consumer Prices Index (CPI)

The CPI measures the average change in prices over time that consumers pay for a range of goods and services. These goods and services can include everything from cinema tickets to food, but exclude housing costs and mortgage payments. The Government uses the CPI to measure inflation.

D

Defined Benefit Scheme

This is a pension scheme that, like the BTPS, gives you benefits based on a formula that uses your Final Pensionable Salary (or CARE) and Pensionable Service.

Defined Contribution scheme

A pension scheme that’s based on the amount of money you save – or contribute – into it. If it’s a workplace pension, your employer will contribute to it too. Your money is then invested to give it a chance to grow.

Dependent child/children

These are children who are:

  • Under 17.
  • Between 17 and 25 and still in full-time education/training and earning below a set level.
  • Over 17 and physically or mentally unable to support themselves.
They include your children (whether legitimate or illegitimate), adopted children and step-children.

E
F

Final Pensionable Salary

This is the salary we use to calculate what you get from the Final Salary part of your pension. That’s your pension before 1 April 2009. We use either:

  • Your highest pensionable salary in the last three years.
  • OR
  • The best average pensionable salary you earned over three consecutive years in the last 10 years.
We pick whichever is higher.

G

GMP Payment Age

This is the age we start to pay you your Guaranteed Minimum Pension. It’s 65 for men and 60 for women no matter what your State Pension Age is.

Guaranteed Minimum Pension (GMP)

The Guaranteed Minimum Pension (GMP) was in force between April 1978 and April 1997. It protected the pension rights of members in Defined Benefit pension schemes that, like the BTPS, were contracted out of the Additional State Pension.

The GMP gives you broadly the same pension as you would have had if you’d been contracted in to the Additional State Pension. Your get your GMP at 60 if you’re a woman and 65 if you’re a man no matter what your State Pension Age. Your GMP is usually just a small part of your BTPS pension.

H

HMRC

Her Majesty’s Revenue & Customs – the people who collect our taxes to pay for the UK’s public services.

I

Individual Protection (or Fixed Protection)

You usually pay tax if the amount you take from all your pension schemes is more than the Lifetime Allowance. This figure is set by HMRC and is currently £1,073,100 for most people.

Because the Lifetime Allowance used to be higher than this, those people who have benefits that are over the Lifetime Allowance have been able to protect the value of their benefits from future tax charges. There are different types of protection, each with different conditions attached. You can find out more about the different protections at gov.uk/tax-on-your-private-pension/lifetime-allowance.

If you’ve protected your Lifetime Allowance through HM Revenue & Customs, please give us a call on 0800 731 1919 to let us know.

Inflation

The everyday prices you pay for goods and services increase over time. The rate of this increase is known as inflation.

J
K
L

Lifetime Allowance

This is the maximum you can be paid from your pension schemes before you start paying an extra tax charge. The figure is set by HMRC and is currently £1,073,100. The figure goes up every year in line with the Consumer Prices Index (CPI). Every time you’re paid money – whether a lump sum or a regular income – from a pension scheme, you use up a percentage of your Lifetime Allowance.

M
N

New State Pension

If you reached State Pension Age on or after 6 April 2016, the New State Pension applies to you. The New State Pension is a single-tier pension (unlike the Old State Pension which was made up of two tiers: the Basic State Pension and the Additional State Pension). To get the New State Pension, you'll need at least ten qualifying years on your National Insurance record. These are years when you've been either paying National Insurance or receiving National Insurance credits. 

Normal Pension Age

If you're in section B or C, this is 65. However, if you've built up benefits in the BTPS before 1 April 2009, we'll treat these as if your Normal Pension Age was 60.

O

Old State Pension

This is a pension from the Government that most people can claim if they reached State Pension Age before 6 April 2016. It’s based on your National Insurance contributions. There are two tiers to the pension: the Basic State Pension and the Additional State Pension – also known as the State Earnings-Related Pension Scheme (SERPS) and the State Second Pension. The New State Pension replaced the Old State Pension on 6 April 2016.

P

Pension Increase Exchange (PIE)

This is where you choose to give up some of your future pension increases for a higher annual pension straight away. You can’t give up increases on all of your pension payments. Legally, some parts of your pension – like the benefits you built up after 6 April 1997 – must increase each year in line with inflation.

Pensionable Salary (Section B and C)

This is your basic annual salary. It includes London Weighting and some other allowances, but not overtime. Sometimes it’s called pensionable pay.

Pensionable Salary Member

A member who hasn’t exchanged any of their Pensionable Salary for other benefits and become a Shadow Salary Member.

Pensionable Service

This is the amount of time you’ve worked for BT and been in the BTPS, or the pension schemes that came before it. You might also have ‘bought’ some extra time by transferring another pension into the BTPS. And, depending when you joined the Scheme, you could have ‘bought’ ‘Added Years’ as well.

Q
R

Reckonable Service

This is your Pensionable Service within BTPS minus any absences – or non-reckonable days – that don’t count towards it

Retail Prices Index (RPI)

The RPI measures the average change in prices over time that consumers pay for a range of goods and services. Unlike the Consumer Prices Index, it includes housing costs, such as council tax and mortgage interest repayments, as well as things like food, clothes and petrol.

S

Shadow Salary

A Shadow Salary Member’s Pensionable Salary if they were a Pensionable Salary Member.

Shadow Salary Member

A member who has exchanged some of their annual pay for other benefits.

Spouse

Someone of the same or opposite sex who is legally married to you.

The Additional State Pension has had various titles over the years. One of these titles is the State Earnings-Related Pension (SERPS).

SERPS operated between April 1978 and April 2002. If you paid full Class 1 National Insurance contributions on a certain level of earnings during any of those years, you earned a SERPS pension on top of your Basic State Pension. SERPS was replaced by the State Second Pension which ran until 2016.

State Pension

This is either the Old State Pension (which includes the Basic State Pension and the Additional State Pension) or the New State Pension depending on when you were born. If you reached State Pension Age before 6 April 2016, you get the Old State Pension. If you reach or reached it after that, you get the New State Pension.

State Pension Age

This the earliest age you can claim your State Pension. It used to be 60 for women and 65 for men. But it’s been gradually rising. Between 2010 and 2018 it rose to 65 for women. It will rise again to 66, 67 and 68 for both men and women. The Government reviews State Pension Age regularly to make sure it’s affordable and fair. You can check your State Pension Age at gov.uk/state-pension-age

State Pension Rebalance

When you reach State Pension Age, the State Pension Rebalance reduces your BTPS pension to take into account the extra State Second Pension (S2P) you get from the Government.

You get the S2P because, in April 2009, you stopped being contracted out. This meant that you and BT started paying higher NI contributions towards your S2P. To compensate you for this, your BTPS contributions were reduced. We show this on your payslip as an allowance.

The State Pension Rebalance aims to make your total State Pension and BTPS pension as close as possible to the total pensions you would have had if the BTPS had carried on contracting out.

State Second Pension

Previously known as the State Earnings-Related Pension (SERPS), this is part of the Old State Pension. It’s paid on top of the Basic State Pension. The amount you get is based on the National Insurance contributions you paid from April 2002 until April 2016.

T

Temporary Supplementary Pension

If you retire before State Pension Age (SPA), the Temporary Supplementary Pension tops up your income until you can start taking your State Pension. Once you reach SPA, the payments stop.

Trivial Commutation

This is where you exchange your pension for a one-off cash lump sum. You can only do this if the total value of your BTPS Pension, plus any other pensions you might have, is less than £30,000. And once you’ve taken the cash, you can’t change your mind. You won’t get any pension payments and nor will any of your dependants if you die.

If you take the lump sum before you start taking your pension, 25% of the cash is tax-free. If you take it after you start taking your pension, you’ll have to pay tax on all of the cash.

Trustee

The Trustee of a company pension scheme acts separately from the company. They make sure the scheme is run properly and that its assets are invested responsibly and in the best interests of scheme members.

U

Uncrystallised Funds Pension Lump Sum (UFPLS)

A UFPLS is a lump sum that you can take directly from your pension fund. 25% of the lump sum is usually tax free and the remainder is taxed as income. You can only take an UFPLS from your BTPS pension if you have chosen the Maximum Lump Sum options (numbers 2 or 5) and have remaining AVCs. You have to let us know you want to take an UFPLS at least a month before you retire.

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