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Here are a list of some of the most frequently-used terms used about Pensions. If what you are looking for is not here, please contact the Pensions Office

Q. Accrual Rate

The rate at which an active member builds up pension benefits in a Defined-Benefit (DB) scheme.

Q. Active member

Someone currently paying into a Pension Scheme

Q. Annuity

A pension "product" purchased from an insurance company at retirement, using funds accrued in a personal / stakeholder / DC pension plan


Additional Voluntary Contributions. Whereby a member elects to pay additonal money into a pension scheme in exchange for additional DB or DC benefits. Typically, a money-purchase AVC is used to acquire additonal DC benefits, whereas an Added Years AVC is used to purchase additional DB benefits

Q. Career Revalued Benefits (CRB)

A type of Defined Benefit scheme where pension benefits are based on actual earnings and revalued over the course of scheme membership. I.E: Hybrid members: 1/150 x annual earnings = annual pension (revalued until retirement)

Q. Contracted-In

Whereby a scheme is contracted-in the Additional State Pension and does not have the responsibility for paying the benefits you are accruing in the Additional State Pension. Those benefits continue to be accrued by the member paying "A" rate National Insurance contributions and who will receive these benefits from the State at retirement. The CPS became contracted-in from 1st Janaury 2013. 

Q. Contracted-Out

Whereby a scheme is contracted-out of the Additional State Pension and assumes responsibility for paying a person's benefits which would have accrued in the Additional State Pension for the period of scheme membership. Members of Contracted-Out scheme pay reduced National Insurance contributions ("D" rate). The CPS was contracted-out prior to 1st Janaury 2013. 

Q. Contractual Sick Pay (CSP)

Paid to employees by their employer - dependent on specific terms of contract

Q. Contractual Maternity / Paternity Pay (CMP / CPP)

Paid to Maternity / Paternity cases by their employer - dependent on specific terms of contract

Q. Contributions-Equivalent Premium (CEP)

Payment to Her Majesty's Revenue & Customs to re-instate a person into the Additional State Pension, in the event of contributions for a period of scheme membership being refunded. This is only paid when a member leaves a Contracted-Out pension scheme with less than two years' service


Consumer Prices Index (CPI). Method by which pensions in payment / accrued pensions are revalued. Check with your pension scheme to see if this index applies to your benefits

Q. Deferred Member

Someone who no longer pays into the scheme, but who retains pension rights in the scheme. This pension will be paid upon retirement, but can also be transferred-out to another recognised pension scheme.

Q. Defined Benefit (DB) scheme

A type of pension scheme, whereby guaranteed pension benefits are payable at retirement in accordance with the rules of the scheme. 

Q. Defined Contribution (DC) scheme

A type of pension scheme, whereby the scheme does not guarantee the level of pension benefits at retirement and the pension is in the form of a personal pension fund. e.g. Personal Pension / Stakeholder / Money-Purchase arrangement, where the level of pension at retirement depends on the amount of contributions paid into the scheme, investment returns, and annuity rates at retirement

Q. Eligible Children

Children of scheme members who would be eligible to receive a pension income in the event of the member's death. Eligibility is dependent on the age of the child or the nature of their dependancy at the time of the member's death.

Q. Final Salary Scheme

A type of Defined-Benefit pension scheme where pension benefits earned are based on scheme membership, salary shortly before leaving and accrual rate. i.e. The USS Final Salary scheme has a defined-benefit of: 1/80 x membership (yrs) x annual salary = annual pension

Q. Flexible Retirement

Arrangement by which employees can start to receive pension benefits without leaving their job (usually as a result of reducing hours worked / salary point).

Q. Funeral Grant

A one-off tax free payment, which is paid to the next-of-kin of a deceased scheme member (CPS only)

Q. Gross Pay

Salary before any deductions (i.e. tax)

Q. Lifetime Allowance (LTA)

The maximum value of a member's pension that can be drawn in the UK without triggering an additional tax charge. Currently this is £1.25 million

Q. National Insurance

An additional contribution paid by members (subject to eligibility), which gives the member eligibility for a number of state benefits, including the State Pension. The USS is contracted-out of the Additional State Pension, which reduces the NI contribution paid by members of that scheme. The CPS is not contracted-out of the Additional State Pension, therefore members pay National Insurance at the full "A"-rate

Q. Net Pay

Salary after all deductions (i.e. tax)

Q. Next-of-Kin

A member's closest living relative

Q. Occupational Maternity / Paternity pay (OMP / OPP)

See "Contractual Maternity / Paternity pay"

Q. Occupational Sick Pay (OSP)

See "Contractual Sick Pay"

Q. Pension

Income payable to scheme members at retirement, as a result of membership in a pension scheme.

Q. Pension Earmarking Order

An order by a court in England or Wales which allocates a lump sum, or income to a member's former spouse payable at retirement.

Q. Pension Sharing Order

An order by a court in England or Wales which allocates a lump sum, or income to a member's former spouse payable at the time of divorce.


Recognised Overseas Pension Scheme. A scheme which is recognised by the HMRC for the purpose of accepting pension transfers from a UK pension scheme.

Q. Retired member

Someone who is in receipt of a pension from a pension scheme


Retail Prices Index (RPI). Method by which pensions in payment / accrued pensions are revalued. Check with your pension scheme to find out if this index applies to your benefits

Q. Sabbatical

An authorised extended period away from work - usually unpaid

Q. Salary Sacrifice

Arrangement by which a member's pension contributions are deducted. Through Salary Sacrifice, a member's salary is reduced by the exact amount of pension contributions, and in return, the employer pays the pension contributions for the member. The effect of this arrangement is that the same amount of pension contributions are deducted from a member's pay, but it is deemed to have been paid by the employer and so the member and the employer pay less National Insurance contributions.

If you leave within 2 years of joining a pension scheme, NO CONTRIBUTIONS PAID THROUGH SALARY SACRIFICE WILL BE REFUNDABLE TO YOU. Please contact the Pensions Office for a Salary Sacrifice opt-out form


A pension provider that runs the Cambridge University Assistants Defined Contribution Pension Scheme, part of the Hybrid Arrangement.

Q. State Pension

A pension paid by the State to to those who are eligible at State Retirement Age.

Q. Additional State Pension

Previously known as the State Second Pension or SERPES. Paid in additonal to the State pension, based on a person's National Insurance contributions during their working life.

Q. Statutory Maternity / Paternity pay (SMP / SPP)

A legal entitlement, paid by the employer to all maternity / paternity cases, assuming a minimum employment qualifying period has been achieved

Q. Statutory Sick Pay (SSP)

A legal entitlement, paid by the employer to all employees to cover absence incurred due to sickness. SSP usually covers any sickness periods more than 3 consecutive days, and less than 28 weeks. SSP is payable providing the employee in question has contributed sufficienct National Insurance above the Lower Earnings Limit

Q. Spouse/Dependant Pension

Pension paid to a widow(er), partner, dependant of a deceased scheme member.