Glossary
Terms used throughout the site which appear in bold type are explained here
- Actuarial Valuation:
An investigation by an actuary into the ability of a pension scheme to meet its liabilities. This is usually to assess the funding level by comparing the actuarial value of assets and the actuarial liability. - Actuary:
An adviser on financial questions involving probabilities relating to mortality and other contingencies. - Additional Voluntary Contributions (AVCs):
Contributions over and above a member’s normal contributions if any, which the member elects to pay to the scheme in order to secure additional benefits. - Bonus Augmentations:
Benefit improvements from valuation surpluses arising from valuations undertaken after October 1994. Bonus Augmentations are not fully guaranteed by the Government.
- Bonus Augmentation Fund:
This contains the members’ share of surplus: Bonus Augmentations awarded since 31 October 1994 are paid from the assets of this Fund. - Child:
A posthumous child, step child, legally adopted child, for whose care and maintenance the member was, in the opinion of the trustees, responsible for at the relevant date. - Commutation:
The giving up of a part or all of the pension payable from retirement for an immediate lump sum. - Contributing service:
The total of:
• Service during which contributions were paid to the Scheme
• Any back service credit granted in exchange for a transfer value payment from a previous scheme
• Any added years purchased by a contributing member
• Extra service credits awarded from valuation surpluses prior to October 1994 - Deferred Pensioner:
A person entitled to preserved benefits.
- Dependant:
A person who was financially dependant on the member at the relevant date and a child of the member who was, in the opinion of the trustees, not financially dependent but was under the age of 18 or in full time education or training. - Earmarking:
An order of the Court when a member of an occupational pension scheme or personal pension scheme divorces, directing the trustees or managers to pay some or all of the member’s benefits to the ex-spouse at the time they become payable to the member. - Equivalent Pension Benefit (EPB):
The benefit which must be provided for an employee who was contracted out of the former graduated pension scheme. - Graduated Pension Scheme:
The state scheme which commenced on 3 April 1961 and terminated on 5 April 1975.
- Guaranteed Fund:
This is the fund which contains the assets necessary to pay all of the Guaranteed liabilities, which are the benefits earned by members during their employment with British Coal and the annual RPI increase on these benefits, ie all benefits except Bonus Augmentations. - Guarantor’s Fund:
This contains the balance of the Guarantor’s share of surplus and its liabilities consist of the Trustee’s obligation to pay the Guarantor's share of each valuation surplus to the Government in 10 annual instalments. - Guaranteed benefits:
Scheme benefits fully covered by the Government guarantee. - Guaranteed Minimum Pension:
The Guaranteed Minimum Pension (GMP) is broadly equivalent to the entitlement to pension from the State Earnings Related Pension Scheme (SERPS) that members would have earned during their years of contributing service had they not been contracted out of the SERPS. - Guarantor:
The Secretary of State for Trade and Industry .
- Inland Revenue Limits:
The maximum pension and lump sum benefits that can be paid relative to earnings and service. Further details are given in the Pension Taxation Factsheet leaflet on the Publications web page. - Investment Reserve:
This is the balance of British Coal’s share of surplus from valuations before 1994. This money will be available as first call to meet a deficiency in the Guaranteed Fund but, if not used for this purpose, will be payable to the Government over a period of not less than 25 years from 31 October 1994. - IWMPS:
The Industry Wide Mineworkers' Pension Scheme - Pension Sharing:
The splitting of a member’s benefits under a pension scheme between the member and the divorced spouse, either within the scheme or by means of a transfer payment. - Pensionable age:
With effect from on or after 1 March 1992, in respect of both male and female members, is the age of 60. - Pensionable salary:
The amount of a Scheme member's earnings used to calculate his or her pension entitlement at the date of leaving service, in accordance with the provisions of the Rules of the Scheme at that date. - Reducing bonus:
Following a shortfall in the Scheme, bonuses awarded at valuations before 22 September 2003 start to reduce. These are called "Crystallised Augmentations" in the Scheme Rules. - Special Bonus:
The increase made to Guaranteed benefits in autumn 2003. - Standstill:
If there is a shortfall in the Bonus Augmentation Fund, then the additional protection of standstill comes into play. Bonuses, which had until that time been level, non-increasing bonuses, become reducing bonuses. Each year, the bonus will reduce by the amount of RPI increase in the guaranteed benefits. By adding together the increasing benefit and the reducing bonus, the total benefit amount payable is protected - benefits "stand still" and do not reduce overall. - State Earnings Related Pension Scheme (SERPS):
The additional pension provisions of the state pension scheme.
