Explanation of pension terms

Admitted body status

A company or organisation that provides a public service, which has entered into an agreement with the council for some or all of their employees to be members of the Local Government Pension Scheme (LGPS).

Contracted out

The LGPS is contracted out of the State Earnings Related Pension Scheme (SERPS). This means that you pay reduced national insurance contributions between the lower and upper earnings limits, unless you have chosen to pay married woman's or widow's reduced rate of national insurance and you do not earn a pension under SERPS.

Instead the LGPS must guarantee to pay you a pension that is generally as high as you would have earned if you had been in SERPS. For contracted out membership on and between 6 April 1978 and 5 April 1997 this is covered by a 'Guaranteed Minimum Pension'. For membership after 5 April 1997 the LGPS has guaranteed that the benefits it provides will be no less favourable than those provided under a reference scheme under the pensions Act 1995.

Final pay

This is the figure used to work out most of your pension benefits and is normally your pay in the last year before you retire, or one of the last of the two years pay if that amount is higher. For a part time employee, the figure used is normally the pay you would of received if you had worked full time. If your pay is reduced because of sickness then the final pay is taken to be the pay you would of received if you had not been sick. If your employer has issued a certificate of protection then we may use the sum of your best pay, over the initial period stated.

Guaranteed minimum pension

This is the minimum pension that the LGPS must pay you for the period that you were a member of the LGPS on and between 6 April 1978 and 5 April 1997. It is worked out by using the SERPS entitlement that you would have earned if you had not been a member of the LGPS during this period.

Page last updated: 02 August 2017