Glossary

The Annual Allowance (AA) is a yearly limit to the total amount of contributions that can be paid to a defined contribution pension scheme and the total amount of benefits that you can build up in a defined benefit pension scheme.

The AA is currently £60,000, although a lower limit of will apply if you have already started drawing a defined contribution pension (the Money Purchase Annual Allowance) or have taxable earnings in excess of £200,000 a year (the Tapered Annual Allowance) .

The annual allowance applies across all of the schemes you belong to. Tax charges apply if you exceed the annual allowance.

Additional Voluntary Contribution. Contributions that you can choose to make to increase the value of your pension entitlement.

A historic AVC scheme specific to members of the Rolls-Royce Pension Fund section, which provides an additional fixed pension in the scheme.

The valuation of a defined benefit pension for transfer to another pension arrangement.

The act of giving up pension in exchange for a tax-free cash lump sum.

A multiple provided by the scheme Actuary that determines the amount of tax-free cash you receive in exchange for giving up pension in exchange for a tax-free cash lump sum.

A benefit relating to past service in an occupational pension scheme where the member is no longer active but has not yet retired from the scheme and taken their benefits. A deferred pension is often called a 'paid-up pension' or a 'frozen pension'.

A scheme in which the benefits you receive are defined in the scheme rules. Most commonly, the benefits provided are related to your earnings when leaving the scheme or retiring and the length of your pensionable service. A defined benefit scheme is often called a 'final salary scheme'.

A scheme in which your benefits are determined by the value of your pension fund at retirement. The fund value is determined by the contributions paid into it by you, the Company (if applicable) and any investment returns. A defined contribution pension is often called a 'money purchase' scheme.

A member who became deferred when the Fund closed to future benefit accrual on 31 December 2020 and who remains employed by Rolls-Royce.

An element of pension that relates to you being contracted-out of the State Second Pension while being a member of the Fund. As the name suggests, this provides a guaranteed level of benefits once you reach 65 years of age (or 60 as a woman). This is because you won't receive these benefits as part of your State Pension, due to being contracted-out.

Introduced on 6 April 2024 following the abolition of the Lifetime Allowance, the LSA is a cap on the maximum tax-free cash you can receive your pension scheme(s). The LSA is £268,275 and applies across all of your pensions, not to each one.

A court order that instructs a pension arrangement to share part (or all) of a member's pension benefit with their ex-spouse as part of divorce proceedings. The ex-spouse receives a percentage of the cash equivalent transfer value as specified by the court, and the member's pension is reduced to take account of this.

Although you are a member of the Rolls-Royce UK Pension Fund, you will be a participant in one of the sections of the scheme. You can find out which section you're a member of by visiting the home page of this website.

A pension paid to a member's spouse in the event of the member's death.

A member entitled to a deferred pension after leaving employment with Rolls-Royce

A cash sum that you may be eligible to take on retirement. Any quote you perform on this website or receive from the Rolls-Royce pensions team will always show the maximum tax-free cash lump sum you can take.

An additional defined contribution pension arrangement that members of the Rolls-Royce UK Pension Fund had the option to join if they had an all-inclusive rate of pay. The top-up scheme closed at the end of 2020 on the launch of the Rolls-Royce Retirement Savings Trust.

The value of a previous pension membership of another external pension scheme, that may have been transferred into the Rolls-Royce UK Pension Fund to provide additional benefits in the scheme.

The act of transferring your benefits from a previous pension scheme to a new pension arrangement.