Jargon Buster
Here you will find explanations of the technical terms used on this website, ordered alphabetically.
A
ACCRUAL RATE is the fraction of Final Pensionable Salary that you will receive for each year of Pensionable Service in a defined benefit scheme such as the SCPF. It is 1/54 for the Pre-2009 Section and 1/60 for the Post-2009 Section.
ACTIVE MEMBER is a member of an occupational pension scheme (such as the SCPF) who is accruing benefits under that scheme in respect of current service.
ADULT DEPENDANT is a person who, in the opinion of your Employing Company, is financially dependent on or interdependent with you.
ANNUAL ALLOWANCE is the maximum value of pension benefits, including AVCs, that HMRC allows you to build up in any year without incurring a tax charge. The Annual Allowance is currently £60,000 a year.
ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVCs) are the contributions over and above a member's normal contributions, which the member elects to pay to an AVC arrangement of an occupational pension scheme (such as the SCPF) in order to secure additional benefits.
B
BASIC STATE PENSION (BSP) is the flat rate (not earnings related) State pension paid to all who have met the minimum National Insurance contribution requirements, their spouses, subject to certain conditions, and widow(er)s before 6 April 2016. See new State Pension.
C
CHILD is any one of your unmarried children (legitimate, legitimated, illegitimate, lawfully adopted, or step) who:
- has not yet reached 18 years; or
- is under 23 years and in full-time education; or
- has a disability that means they are dependent on you.
Children is used throughout this website accordingly.
COMMUTATION is exchanging some of your pension for a Pension Commencement Lump Sum. Under current legislation, this cash lump sum is paid tax free.
CONTRACTED OUT was the status of the SCPF in relation to the State Second Pension (S2P). Before 6 April 2016 if you were a member the benefits you would have received from S2P were replaced by benefits from the SCPF. From 6 April 2016, a single tier state pension was introduced which replaced the basic state pension and S2P as a result contracting-out ended for all occupational pension schemes.
D
DEFERRED MEMBER is someone who has left the service of companies in the Shell Group or opted out of the SCPF, not started to receive a pension and retains benefits in the SCPF.
DEFINED BENEFIT (DB) SCHEME is a scheme in which the benefits are defined in the scheme rules and build up independently of the contributions payable and investment returns. Benefits are based on pensionable earnings and the length of pensionable service on leaving the scheme, retiring or death, whichever comes first. It is also known as a final salary scheme.
DEFINED CONTRIBUTION (DC) SCHEME is a scheme in which a member's benefits are determined by the value of their ‘pot’ at retirement. The ‘pot’, in turn, is determined by the contributions paid into it in respect of that member, and any investment returns. It is also known as a 'money purchase' scheme. Defined contribution schemes can be set up by employers for their employees or can be set up by an individual for him or herself.
DEFERRED PENSION is a benefit relating to the past service of a member of an occupational pension scheme who is no longer an active member but has not yet taken pension benefits. The benefits are payable at retirement or, if earlier, death.
