Pensions are complex and the ongoing 2015 Remedy which aims to correct the discrimination found in the 2015 pension reforms is no different. We’ve put together a useful list of pension jargon that will help you understand more about the 2015 Remedy.

Legacy Schemes

These are the pension schemes that were in place prior to the 2015 pension reforms. These schemes were closed to new members on 1 April 2015 when the new CARE pension schemes came into effect. You can find more information about the legacy schemes below:

NHS – 1995 and 2008

Teachers – STSS

Police – 1987 and 2006

Firefighters – 1992 and 2006

The Reformed Schemes or the 2015 (CARE) Schemes

Members who started working for (or re-joined) the NHS, Teachers, Police and Fire Service on or after 1 April 2015 would automatically be enrolled in the 2015 schemes.

The 2015 pension schemes are calculated using Career Average Revalued Earnings (CARE), which means members earn a certain amount each year based on their pensionable pay for that year. This is then revalued each subsequent year by a set revaluation rate which is linked to inflation or the Consumer Price Index. The final pension is calculated by adding together the amounts earned in each year of membership.

Remedy Period

This is the period affected by the McCloud/Sargeant ruling and the subsequent 2015 Remedy. The period begins on 1 April 2015 and ended on 31 March 2022. Members will be given a choice as to which scheme benefits they’d like to receive for this period at their point of retirement, this is known as a deferred choice underpin.

Deferred Choice Underpin (DCU)

This is the method that, following a public consultation, was chosen by the UK government to correct the discrimination found in the 2015 pension reforms.

Under the DCU, members who are still currently in their legacy schemes will remain so and members who were moved to the 2015 scheme on 1 April 2015 will be returned to their legacy schemes for service between 1 April 2015 and 31 March 2022.

Members will then be given a choice at their point of retirement (or when benefits become payable) to choose whether to receive their legacy scheme benefits or the 2015 scheme benefits for their pension built up in the remedy period (see above). Members who have retired since 1 April 2015 will also be given this choice.

Eligible Member

For the 2015 Remedy an eligible member is a scheme member who has a period of remediable service in a pension scheme.

Pensionable Service

This is the amount of time (hours/days) you spend at work that counts towards your pension. Remediable Service/Relevant Service For the 2015 remedy, remediable service, also known as relevant service relates to any pensionable service that meets the following criteria;

  1. takes place between 1 April 2015 and 31 March 2022;
  2. was in a legacy pension scheme or the reformed 2015 pension scheme;
  3. Member was paying in to a legacy scheme on or before 1 April 2012 and;
  4. does not have a disqualifying gap in service of more than five years before scheme membership on or after 1 April 2012 up to 31 march 2022

Disqualifying Gap

This is a period longer than five years in which a member has not been in employment or has not been gaining pensionable service in either the legacy or reformed pension schemes.

Transitional Protection

Transitional protection gave members who were within ten years of their schemes’ normal retirement age the ability to remain in their legacy schemes, while other members were moved to the new CARE schemes in, or after 1 April 2015.

Tapered Protection

Members who were not quite within ten years of their schemes’ normal retirement age were given tapered protection. They didn’t transfer over to the new CARE pension schemes when they were first introduced. Instead, they joined later, at a date determined by their length of service or age on 1 April 2012.

Minimum Pension Age

This is the lowest age at which you can take your pension benefits. This is currently set at 55 for most pension schemes. In the 1987 Police Pension Scheme, members can retire after reaching age 50, or earlier by achieving a combination of age and pensionable service requirements.

Index Linked Pension

An index-linked pension is simply a pension where the value increases annually dependent on inflation rates. Most public service pensions are currently revalued based on the consumer price index.

Guaranteed Benefits

This is the guaranteed minimum retirement income for members regardless of how much they’ve paid in to the scheme.

Lifetime Allowance

This is the total amount anyone can build up in pension savings without incurring a tax charge. Lifetime allowance is set by the UK Government and enforced by HMRC. The lifetime allowance limit for 2020/2021 is £1,073,100.00.

Annual Allowance

This is the most anyone can save in all their personal pensions in a single tax year (6 April to 5 April) before tax is due to be paid on pension savings. The standard annual allowance limit for 2020/2021 is £40,000.00.

You can cut through more pension jargon by visiting the glossary section of our website. You can also find out what 2015 remedy means for you by visiting our 2015 remedy area or our regularly updated Frequently Asked Questions.

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