Glossary
A short guide to words and terms commonly used in pensions.
Actuary
An expert who specialises in forecasting how finances may behave into the future. One of the Group actuary’s key tasks is to carry out the valuation –they estimate how well the Group is funded by comparing the assets it is likely to build up with the benefits and costs it is expected to pay out.
Beneficiary
Someone you have named to receive benefits from the Group following your death. Your beneficiaries are likely to include a partner or children (if any), but can also include any person – or organisation, such as a favourite charity – you decide to nominate.
Dependant
Someone who relies to some extent on your income. So, your partner and children are considered dependants, but you may have others. The Group Trustees may consider paying benefits following your death to other dependants if you do not leave a partner or family.
ESPS
The Electricity Supply Pension Scheme
Group
The Drax Power Group, a pension scheme which forms part of the ESPS.
Group service
Broadly speaking, the length of time you have been a member of the Group. However, your Group service can also include:
- any service credit you receive if you transfer in benefits from another Group, or a different arrangement outside the ESPS; or
- any added years you have built up from paying extra contributions.
Normal pension age
The age your pension is expected to start. This is 63 for anyone joining on or after 1 April 1988 (and 60 for members who joined before that date).
If you stop work before normal pension age, it counts as early retirement and some or all of your benefits may be reduced to allow for the likelihood you will receive them for longer.
Partner
Your husband or wife, or civil partner, or (if the Group Trustees agree) a long-term partner of either sex who lives with you and relies on your joint income.
Pensionable salary
The salary figure used for working out your benefits. Your pensionable salary is normally your earnings over the 12 months before you retire, leave or die (not including any one-off payments).
However, if either of the following two figures works out to be higher, it will be used as your pensionable salary instead of the above amount:
- The highest of your pensionable salaries in the five years before you retire, leave or die – allowing for increases in line with inflation on the figures for the years before the most recent year.
- The highest average of your pensionable salary over any three years running in the ten years before you retire, leave or die (again, allowing for inflation increases on the salary figures for the first nine years).
Please note that the ‘permitted maximum’ limit (see top right) applies to your pensionable salary – however it is worked out – if you joined the Group after 31 May 1989.
Permitted maximum
If you joined the Group after 31 May 1989, this limit applies to the yearly salary that can count towards your contributions and benefits.
Protected person
Broadly, this means a member of the ESPS since 31 March 1990 without a break in pensionable service, and working in England and Wales throughout.
The Group is now generally closed to new members, but will admit protected persons.
Service credit
The number of years (and part-years) added to your Group service if you transfer in benefits from another Group of the ESPS (when it is sometimes called a ‘scheme service credit’) or from another pension scheme outside the industry (called a ‘back service credit’).
State pension age
The age your State Pension starts. State Pension ages are currently under review by the Government and, depending on dates of birth, people may have significantly different State Pension ages. You can work out your State Pension age on the special calculator on the Government’s ‘GOV.UK’ website.
It is important to bear in mind that your State Pension age may not be the same as your normal pension age. So, the retirement benefits you receive from different sources may not start at the same time.
