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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 Teachers' 2015 scheme is 1/57 of pensionable earnings each year.

Active member

You are an active member if you are paying into the scheme.

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.

Buy out reduction

If your normal pension age is over 65 you may elect to pay contributions that will enable you to retire up to three years early without a reduction for early payment. 

A buy out must be made within six months after a member joins the Teachers’ 2015 scheme. 

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 Scottish Teachers’ Superannuation 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. While you’re paying into the scheme this is currently in line with the Consumer Prices Index (CPI) plus 1.6%. If you leave the scheme before retiring, your pension will continue to be revalued but in line with CPI only. 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 (subject to HMRC rules).

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 of inflation by which we increase pensions.

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 five years of leaving, we will revisit the pension we have revalued during your absence and re-calculate it using CPI plus 1.6%. We will also continue to link any service you earned in the Scottish Teachers’ Superannuation Scheme to your final pensionable salary.

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