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We work hard to avoid using jargon in all our communications with you but some terms are unavoidable. These are explained here. We’ve also included some terms which we try not to use but you will often see in communications about pensions in general. If there are any terms you don’t understand but which aren’t explained here, please let us know using the Contact Us tab.

Accrual rate

This is the proportion of earnings which count for pension each year. In other words how much pension you earn in any one year. For example the accrual rate in the Police 2015 scheme is 1/56.1 of pensionable earnings each year. 

Active member

You are an active member if you are paying into the scheme, or on an authorised period of leave.

Actuarially reduced

This is a reduction in your pension if you take it before normal pension age to take account of the fact that it is paid for longer. 

CARE

Career Average Revalued Earnings is a type of defined benefit pension scheme. A defined benefit scheme guarantees a certain level of benefit at retirement, according to a fixed formula. In this respect it is similar to the current final salary sections of the Police Pension Scheme.

In a CARE scheme your pension is based on your pensionable pay right across your career. The pension you earn each year is based on pensionable pay in that year and is increased by a set revaluation rate, linked to inflation, for each year up to retirement or leaving. The final pension is calculated by adding together the pension earned in each year of membership. 

Commutation

This is an option to exchange some of your pension for a lump sum (which is currently tax free). You currently receive £12 of lump sum for every £1 of annual pension you give up. There is a maximum amount of tax free lump sum HMRC will allow you to take.

Consumer Prices Index (CPI)

CPI is a measure of inflation. Like the Retail Prices Index (RPI) it tracks the changing cost of a fixed basket of goods and services over time. However unlike the RPI it disregards some items, such as housing costs. The rate of CPI is currently used as a measure by which we increase pension for inflation.

Deferred member

You are a deferred member if you leave the scheme before retiring. Your benefits will be referred to as a deferred pension and revalued each year in line with increases in CPI until you retire.

If you return to the scheme within 5 years of leaving, we will revisit the pension we have revalued during your absence and re-calculate it using CPI plus 1.25%. We will also continue to link any service you earned in the Police 1987 or Police 2006 schemes to your final pensionable salary.

If you return after more than 5 years, any service in these sections will be based on your pensionable pay at leaving. Your benefits in the Police 2015 scheme will continue to be revalued in line with increases in CPI.

Double accrual

After 20 years’ pensionable service you earn Police 1987 benefits at twice the standard rate - 2/60 for each year of service rather than 1/60 for each year.

This continues for protected members who remain with the 1987 scheme. A provision for enhanced accrual is maintained for PPS transition members in the new scheme.