Glossary

A salary payment that includes elements of pay that are pensionable in two different schemes - the Rolls-Royce UK Pension Fund and the Rolls-Royce Retirement Savings Trust (top-up section). If you have an all-inclusive rate of pay, you'll have an AIR split that shows what proportion of your salary payment is pensionable in either scheme. As an example, if you're an employee on an AIR salary of £30,000 and have an AIR split of 95/5, £28,500 will be pensionable in the Rolls-Royce UK Pension Fund and £1,500 is pensionable in the Rolls-Royce Retirement Savings Trust.

The annual allowance 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 annual allowance is currently £60,000, although a lower limit of £10,000 may apply if you have already started drawing a pension. The annual allowance applies across all of the schemes you belong to. Tax charges apply if you exceed the annual allowance.

A fixed sum of money paid to an individual, usually every month, who was in a defined contribution pension scheme.

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.

An estimate of benefits payable in respect your scheme membership. Issued annually to active members of our defined benefit schemes. Members with money purchase benefits (such as AVCs) receive an annual statement whether active or deferred.

A type of calculation in a defined benefit scheme that applies an inflation increase to your salary throughout your scheme membership, rather than using your 'final salary'. In this method, your pensionable salary for each individual year of membership is increased by inflation between the year the salary was earned and the year that you leave or retire from 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.

As a member of one of the sections of the Rolls-Royce UK Pension Fund, you were automatically contracted-out of the additional state pension scheme. You paid lower national insurance while being contracted out and may get less from the new state pension scheme than someone who was not contracted-out. You can find out this amount by getting a state pension forecast and looking for the Contracted Out Pension Equivalent (COPE).

Defined benefit scheme. 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'.

Defined contribution 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's entitled to a deferred pension.

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'.

One of the two ways of determining the salary that's used to calculate your pension benefit in The Rolls-Royce UK Pension Fund. In this method, your pensionable salary across all of your pensionable service is based on earnings at the date of leaving or retiring from the scheme.

An element of pension that relates to you being contracted-out of the State Second Pension while being a member of our defined benefit schemes. 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.

Income drawdown is a way of using a defined contribution pension fund to provide you with a regular retirement income by reinvesting it in funds specifically designed and managed for this purpose. The income you get will vary depending on the fund's performance and, unlike a defined benefit pension, it isn't guaranteed for life.

The lifetime allowance is a HM Revenue and Customs limit to the total amount of pension benefits that you can build up in a UK pension scheme. The standard lifetime allowance is currently £1 million and this applies across all of the pension schemes you've been a member of.

A common description for the fund value in a defined contribution scheme. It is sometimes used to describe the cash equivalent transfer value of a pension in a defined benefit scheme.

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.

A period of employment that counts towards the benefits earned in a defined benefits pension scheme. Pensionable service is usually used calculate the proportion of your salary that you'll receive as a pension on retirement.

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 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 pension arrangement that members of the Rolls-Royce UK Pension Fund may choose to join if they have an all-inclusive rate of pay.

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

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

The conversion of a pension that's below a certain level into a one-off lump sum.