TfL Pension Fund

Actuary

The Actuary keeps a regular check on the financial health of the Fund. An Actuary is an expert on pension scheme assets and liabilities, as well as life expectancies and probabilities for insurance purposes, and will be a Fellow of the Institute of Actuaries or the Faculty of Actuaries.

Adult Dependant

An adult dependant is a person who is, in the opinion of the Trustees, dependent on you for support and maintenance of his or her accustomed standard of living when you die. Evidence of dependency may be requested. An adult dependant's pension is payable for life.

Your adult dependant can be:

• your spouse or civil partner
• your partner, including a partner of the same sex
• any other person who is dependent on you, except a child, other than an Eligible Child. 

Additional Voluntary Contributions (AVCs)

AVCs are extra contributions that you can choose to pay to the Fund to provide additional benefits when you retire.

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Basic State Pension

This is a pension payable by the State from State Pension Age and is based on your National Insurance contributions history.

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Contracted-out

Members of the TfL Pension Fund are contracted-out of the S2P (or SERPS) and will receive a pension from the Fund instead. This means that while they are contributing to the Fund they pay a reduced rate of National Insurance contributions. Similarly, someone who is a member of a contracted-in scheme will receive part of their pension from the State in the form of S2P and/or SERPS.

Contributing Member

Someone who is currently employed by one of the participating employers, and who is contributing to the TfL Pension Fund.

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Deferred pension

This is the pension for a deferred pensioner.

Deferred pensioner

Someone who is no longer employed by one of the participating employers, and has chosen to leave their benefits in the Fund.

Disclosure requirements

Under the Pensions Act 1995, pension schemes are obliged to provide members, potential members and their beneficiaries with certain information within specified times.

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Eligible Child

An eligible child is a child who is, in the opinion of the Trustees, dependent on you for support and maintenance of his or her accustomed standard of living when you die. Evidence of dependency may be requested. A child's pension is payable until his or her 18th birthday, but can continue to his or her 23rd birthday if still in full-time education or professional or vocational training. An eligible child can be:

• your own child
• an adopted child
• a stepchild
• a child for whom, in the opinion of the Trustees, you acted as a parent.

For a child who is, in the opinion of the Trustees, mentally or physically disabled at the time you die (or becomes so disabled before the age of 18) and unable to earn an income, the pension can continue for their lifetime.

A child who is born within twelve months of your death, who would have qualified under the above criteria at the date of death, may also be classed as eligible.

Existing Member

You are an Existing Member if you joined the Fund on 1 April 1989 on the merger of the London Transport Pension Fund and London Transport 1970 Superannuation Fund. If you were in service but too young to join these previous schemes (but over 18) or had not completed a year's service, you automatically joined the Fund and became an Existing Member on 1 April 1989. If you were under 18 on 1 April 1989 you were given the option, at that time only, to become an Existing Member when you reached age 18.

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Free-standing AVCs

These are extra contributions that members of an Occupational Pension Scheme can make to an FSAVC scheme to provide extra benefits when they retire.  Such arrangements are established by individual members and do not form part of the Fund benefits.

Fund Office

This is the office where the people managing the day-to-day administration of the Fund are based.

Fund

This refers to the TfL Pension Fund.

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Guaranteed Minimum Pension (GMP)

This is the minimum pension the Fund must guarantee to pay you, in return for being contracted-out of the State Earnings-Related Pension Scheme (SERPS) between 6 April 1978 and 5 April 1997.

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HM Revenue & Customs limits

Under current legislation, HM Revenue & Customs (HMRC) limits the amount of pension someone can receive as well as the value of contributions someone can make to a pension scheme.

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Lower Earnings Limit (LEL)

This is the minimum amount that someone must earn in a tax year in order to build up entitlement to State benefits, including Incapacity Benefit, Jobseeker's Allowance and State Pension. The LEL for 2009/10 is £4,956.

LUL Company Plan Employees

Operational staff whose salaries were restructured under London Underground Limited's 1992 Company Plan.

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New Member

You are a New Member if you joined the Fund after 1 April 1989. If you were in service but under 18 on 1 April 1989 you were given the option, at that time only, to become an Existing Member.

Non-member

• Someone who has opted-out of membership of the Fund or
• Someone who is not eligible to join the Fund.

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Participating Employer

Transport for London, its subsidiaries and several other independent organisations under the terms of their Private Finance Initiative (PFI) and Public Private Partnership (PPP) arrangements.

Pensionable Pay

Both your contributions and benefits are based on your pensionable pay. Your pensionable pay is your basic or contractual salary and may include permanent allowances if agreed by your employer and the Trustees, but excludes overtime earnings. For London Underground Limited Company Plan Employees pension benefits for pensionable service before 6 April 1998 are based on 90% of this rate and for pensionable service from 6 April 1998 on 100%. For New Members a deduction of the Lower Earnings Limit will be made.

For the purpose of working out your benefits from the Fund, your pensionable pay is averaged over the last twelve months of pensionable service.

If you have worked part-time the pensionable pay used to calculate your benefits will be the same as a full-time worker's, however the pensionable pay used for assessing your contributions is a proportion of a full-time worker's to reflect the variation of hours worked.

For members who joined on or after 1 June 1989, the pensionable pay that can be taken into account when working out your pension benefits and your own and your employer's contributions is restricted to the Scheme Earnings Cap.

If your pensionable pay falls, your pension earned up to the end of the year in which the fall takes place is protected.

Pensionable service

The period during which you pay contributions to and earn benefits in the Fund is referred to as pensionable service. Any period of part-time service will be pro-rated, e.g. one year at half of the full-time hours would count as six months pensionable service. Transfer payments received from previous pension arrangements may increase your pensionable service.

Pensioner

Someone who is receiving a pension from the Fund.

Personal Pension

An individual pension arrangement made with a pension provider such as a bank or insurance company.

Principal Employer

Transport for London

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Retail Prices Index (RPI)

The Retail Prices Index measures the average change from month to month in the prices of goods and services purchased by most households in the UK. The Office for National Statistics publishes the data monthly and the results are used to calculate increases to pensions.

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For members who joined on or after 1 June 1989, the pensionable pay that can be taken into account when calculating your pension benefits and your own and your employer's contributions is restricted to a level known as the Scheme Earnings Cap.

In 2009/10 this is £123,600. It is increased each April in line with the Retail Prices Index to the nearest £600.

Scheme Pension Age

Age 65

Stakeholder Pension

An individual pension arrangement with a pension provider such as a bank or insurance company.

State Pension Age (SPA)

State Pension age is currently 65 for men and 60 for women. The State Pension age for women will increase gradually from 2010, so that by 2020 it will be 65.

The increase in the State Pension age will not affect women born on or before 5 April 1950. Women born between 6 April 1950 and 5 April 1955 (inclusive) will have a State Pension age between 60 and 65. Women born on or after 6 April 1955 and before 6 April 1959 will have a State Pension age of 65.

The State Pension age for both men and women is to increase from 65 to 68 between 2024 and 2046, with each change phased in over two consecutive years in each decade. The first increase, from 65 to 66, will be phased in between April 2024 and April 2026; the second, from 66 to 67, will be phased in between April 2034 and April 2036; and the third, from 67 to 68, between April 2044 and April 2046.

State Second Pension (S2P)

This is the 'second tier' State pension that replaced State Earnings Related Pension Scheme (SERPS) in April 2002.

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Transfer in

When a member brings the value of his/her pension benefits from a previous pension arrangement into the TfL Pension Fund.

Transfer out

When a member transfers the value of his/her pension benefits from the TfL Pension Fund to another pension arrangement.

Trust Deed & Rules

The legally binding documents under which the Fund is operated.

Trustees

The Fund is managed by a Board of 18 Trustee Directors (the Trustees) who have four main roles:

• To act in the best interests of the Fund's members and beneficiaries
• To act impartially, prudently and honestly
• To make sure the Fund is administered according to the Trust Deed and Rules of the Fund
• To invest the Fund's assets to obtain the best possible long-term return without putting the Fund at undue risk. Independent specialist investment managers carry out day-to-day investment on the Trustees' behalf

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Variable pension

The variable pension option allows a member who retires early to receive more pension before State Pension Age (SPA) and less from SPA, when the State Pension becomes payable. This helps to even out total income through retirement.

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