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FAS Glossary 


This section should help you understand some of the terms mentioned in this website and in relation to the Financial Assistance Scheme (FAS). It is not intended to replace or modify any definitions found elsewhere, such as laws, regulations, forms and instructions, or scheme rules.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

 

A

Accrued Pension – The accrued pension is the amount of pension a member had built up within their scheme before they left the scheme or it started to be wound-up.

Active Member – This is a person who is in pensionable service under an occupational pension scheme.

Actuarial Reduction - In the context of FAS ill-health payments, a reduction, determined by Department for Work and Pensions with advice from the Government Actuary’s Department (GAD), that is applied to your Assistance to take into account the fact that your Assistance Payments will begin before your Normal Retirement Age.

Administrator – Those responsible for the day-to-day administration of the pension scheme.

Annual Assistance Statement –Annual statement provided to Deferred Assistance Members with a forecast of the amount of Assistance that will be payable at Normal Retirement Age.

Annual Payments – See Payments.

Annuity – This is a product typically bought from an insurance company which entitles the person to receive a regular income for life (and potentially an income to their Survivor after their death).

Assistance – a FAS payment (see Payments).

Assistance Cap (‘the Cap’) – Statutory limit on annual Assistance.

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B

Beneficiary – This refers to all qualifying members of qualifying pension schemes including deferred members, active members, pensioner members, ‘inherited members’ and ‘pension credit’ members. ‘Beneficiary’ also refers to eligible survivors and surviving dependants of qualifying members of qualifying pension schemes who died after their scheme started to wind-up.

Board of the Pension Protection Fund – This is a statutory body established under provisions of the Pensions Act 2004.

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C

Civil Partner – See Survivor.

Compromise Agreements – This is a legally binding agreement where the trustees of an underfunded pension scheme accept an amount that is less than the debt owed by the employer to the scheme.

Consumer Prices Index (CPI) - The general index of consumer prices published by the Office of National Statistics. The increases to FAS assistance in deferment and payment for certain periods of service are linked to CPI. Please see FAS FAQs for further details.

Contracted-Out Pension Scheme – This is a pension scheme that undertakes to provide certain benefits to members, their widows, widowers or civil partners, in return for a reduction in National Insurance contributions. A lower State Additional Pension is paid as part of the State Retirement Pension as a consequence.

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D

Deemed Buyback – Members of a contracted–out pension scheme may in certain circumstances be able to opt to have some or all of their State Additional Pension restored. This process is called ‘Deemed Buyback’. Deemed Buyback is no longer available to qualifying members of FAS qualifying pension schemes.

Deferred Assistance Member – A member who is no longer an active member but who still has benefits preserved in the scheme which will be payable at a later date. The member may have left the service of the employer, or may have opted out of the scheme.

Defined Benefit (DB) pension scheme – These are schemes where members’ benefits are determined by a formula, usually involving pay and/or service with the employer. The most common type of defined benefit scheme is a final salary scheme.

Defined Contribution (DC) pension scheme – These are schemes where members’ benefits are calculated by reference to how much money is put into the pension fund for the member, how much the pension fund has grown and what annuity rate is available when the member retires. This type of scheme is also called a money purchase scheme.

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E

Eligible Child / Eligible Children – The natural child (born or unborn at date of death) of the member, an adopted child, or a child who was financially dependant on the member at date of his/her death who is:

  • Under 18
  • Over 18 and under 23 and in Qualifying Education, or
  • Over 18 and under 23 and has a Qualifying Disability.

Employer – The company which employed the member while he was in pensionable service for the former pension scheme.

Expected Pension – The FAS will top a scheme member’s pension benefits up to a total of 90% of the accrued pension as at the start of wind-up, revalued to the entitlement date (subject to a cap). The revalued pension amount is the ‘expected pension’.

Ex-Spouse – An individual who was previously married to the member.

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F

Financial Assistance Scheme (FAS) – The FAS offers financial help to some people who have lost part or all of their pensions as a consequence of their scheme ending without having enough money to pay full pension benefits.

Former Civil Partner – An individual who was previously in a Civil Partnership with the member.

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G

Guaranteed Minimum Pension (GMP) – In order to contract out prior to 6 April 1997 a scheme’s rules had to be designed to provide for a minimum amount of pension. This was known as the GMP.

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I

Ill-Health Payments – See Payments.

Independent Trustee – A professional trustee unconnected with the employer and not a scheme member. They can be a corporate trustee company or an individual.

Independent Trustee (statutory) – A trustee appointed in accordance with sections 22-26 of the Pensions Act 1995, to a scheme where an insolvency practitioner has been appointed over an employer.

Indexation – This is a way in which pensions in payment and/or preserved benefits are increased at regular intervals to help preserve their value.

Inherited Member – The nominated beneficiary of a member of a pension scheme who died before the start of wind up. For FAS purposes this person effectively becomes the member of the scheme. Survivors of inherited members do not qualify for FAS payments on the death of the inherited member.

Initial Payment – See Payments.

Interested Person - An "interested person" is a potential beneficiary of a pension scheme or their representative, and where a pension scheme has not completed winding up the trustee or manager of that scheme. If you think you meet this definition and you have some information that you think the Financial Assistance Scheme manager should consider in connection with an ongoing review please send your written representations to the scheme manager.

Interim Ill-Health Payments – See Payments.

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L

Liabilities – Amounts which a pension scheme will have to pay now or at some time in the future. The most common liability is to pay retired members’ pensions.

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N

Nomination template – A form for the member to complete to provide information to the FAS in respect of a nominated beneficiary.

Non-Departmental Public Body – A body which has a role in the processes of national government, but is not a government department, or part of one, and which operates at arm's length from their sponsoring Government Department.

Normal Retirement Age – This is the age specified in the scheme rules, as the rules stood at the date the member ceased to accrue benefits, as the age at which a member will normally retire.

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O

Occupational Pension Scheme – A pension scheme organised by an employer to provide pension benefits for its employees.

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P

Partner – A person of either sex who is not married to, or in a civil partnership with, the qualifying member and who is living with the member as if that person and the member were husband and wife or civil partners. Certain partners that meet specific criteria may be entitled to survivor assistance. – See Survivor.

PAYE – Pay As You Earn is the collection of income tax at source by HM Revenue and Customs. This applies to income paid to FAS beneficiaries as well as to income from employment.

Payment Confirmation Certificate – The document sent to members receiving assistance along with the Welcome Pack letters.

Payments (FAS) – The following types of FAS payments can be made. All are paid in instalments, usually on the 21st of each month:

  • Annual payments are payments assessed on an annual basis once all information is known about the member's entitlement. This is usually when the pension scheme has completed wind up.
  • Initial payments are discretionary payments paid to beneficiaries where the pension scheme qualifies for the FAS but where full information about their entitlement is not yet known so only interim levels of payment can be made. This is usually when the pension scheme is winding up. FAS initial payments are made on account of annual payments.
  • Ill-health payments are available to members who are unable to work due to ill health and who are within five years of their normal retirement age. These payments are actuarially reduced to take into account that they are in payment for a longer period of time. They are usually paid when the pension scheme has completed wind up.
  • Interim ill-health payments are made in anticipation of an ill-health payment being made, where full information is not yet known about the member's entitlement. They are made on account of ill-health payments. They are usually paid when the pension scheme is winding up.
  • Severe ill-health payments are available to members who are aged over 55, unable to work, and have a significantly reduced life expectancy as a result of a progressive disease. These payments are not actuarially reduced. Severe ill-health payments are a type of annual payment and so initial payments may be made where full information is not yet available to make a decision about the amount of the severe ill-health payment; this is usually when the pension scheme is winding up.
  • Survivor payments are paid to the spouse, civil partner or partner upon the death of the pension scheme member. Initial payments to survivors in respect of a deceased member can be made whilst the scheme is winding up and full information regarding the member’s pension not known. Annual payments, which may be different, will be made once scheme has wound up. Survivors receive a payment based on 45 per cent of the member’s expected pension.
  • Surviving dependant payments are paid to qualifying surviving dependants upon the death of the pension scheme member. Initial payments to surviving dependants in respect of a deceased member can be made whilst the scheme is winding up and full information regarding the member’s pension not known. Annual payments, which may be different, will be made once scheme has wound up. Surviving dependants receive an amount based on the member’s expected pension and the amount varies depending on whether the deceased member has left a survivor and the number of surviving dependants.
  • Terminal illness payments are available to members of any age who are terminally ill. These payments are not actuarially reduced. Terminal illness payments are a type of annual payment and so initial payments may be made where full information is not yet available to make a decision about the amount of the terminal illness payment; this is usually when the pension scheme is winding up.

Pension Credit, sometimes known as State Pension Credit, is a social security entitlement available to people aged 60 or over on low incomes, paid by the Department for Work and Pensions.

Pension Credit (pension scheme) –In a private pension scheme, this is the amount of benefit right that the ex-spouse of a scheme member becomes entitled to following a pension sharing order.

Pensioner Member – Someone who has retired from the scheme and is currently receiving, or entitled to receive, a pension from the scheme.

Pension Protection Fund (PPF) – The statutory compensation fund administered by the Board of the Pension Protection Fund, funded by a levy on pension schemes. The PPF is a non-departmental public body, sponsored by the Department for Work and Pensions

Pension Sharing Order – An order made by a court as part of a financial settlement on divorce in accordance with the Welfare Reform and Pensions Act 1999.

Pensionable Service – Service as a contributing member of a scheme in years and days, plus any transfer credits notified on an individual basis.

Professional Advisor – Any auditor, actuary, fund manager or legal advisor appointed by the scheme manager or trustees.

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Q

Qualifying Disability – Where an individual is incapable of engaging in full-time paid employment due to a condition that falls within the definition of a disability under the Disability Discrimination Act 1995.

Qualifying Education – A full time educational or vocational course at a recognised educational establishment where in pursuit of that course, the time spent receiving instruction or tuition, undertaking supervised study, examination or practical work or taking part in any exercise, experiment or project for which provision is made in the curriculum of the course, exceeds 12 hours per week in normal term time.

Qualifying Insolvency Event – This is an insolvency event, which meets the requirements set out in the Financial Assistance Scheme Regulations [see the FAS regulations or leaflet FAS P2 for more details].

Qualifying Member – For the purposes of FAS this is a member as defined in the Financial Assistance Scheme Regulations (Regulation 15).

Qualifying Pension Scheme – For the purposes of the FAS this is a pension scheme as defined in the Financial Assistance Scheme Regulations (Regulation 9).

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R

Representative – Scheme members can nominate a representative to act on their behalf when contacting the FAS about FAS payments. In the case of assistance payments to surviving dependants, the FAS scheme manager is able to treat a parent or a person with parental responsibility as the representative of a child aged less than 18 years.

Retail Prices IndexThe general index of retail prices published by the Office of National Statistics. The increases to FAS assistance in deferment and payment for certain periods of service are linked to RPI. Please see FAS FAQs for further details.

Revaluation – Increases to pension rights between the time the member leaves the scheme and the start of their pension payment. The FAS will also revalue accrued pensions for the purposes of calculating assistance where those accrued pensions would have been revalued under scheme rules.

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S

Scheme Manager – This is the Board of the Pension Protection Fund acting in the capacity as manager of the Financial Assistance Scheme.

Scheme Professional – This may be the trustee, administrator, insurer or professional advisor depending upon the circumstances of the scheme and the information required. In the case of schemes that are in the process of winding up the trustee is usually the point of contact. For schemes that have completed the winding up process it may be necessary to approach all parties who were involved in the wind up in order to secure the information required.

Severe Ill-Health Payments – See Payments.

Spouse – See Survivor..

Statement of Assistance Entitlement – A statement that details your entitlement to Assistance from the FAS.

State Second Pension (S2P) – The State Second Pension was introduced in 2002 to reform the State Earnings-Related Pension Scheme (SERPS). S2P provides a more generous additional State Pension for low and moderate earners who are not contracted-out of the state scheme.

Surviving Dependant Payments – See Payments.

Survivor – A FAS survivor is a spouse, civil partner or partner of an eligible member of a qualifying pension scheme following the death of the member. The Civil Partnership Act 2004 came into force on 5 December 2005 and this gives those same-sex couples who chose to register, similar rights as a married couple. Same sex couples who are living together as civil partners (but who have not formed a civil partnership) will be treated in the same way as unmarried couples and may therefore be entitled to Assistance payments under changes made by recent Regulations.

Survivor Payments – See Payments.

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T

Terminal Illness Payments – See Payments.

TPR (OPRA) number – This is The Pension Regulator (TPR) number and it is a number (usually 8 digit) issued to schemes once they have registered with The Pension Regulator. The TPR number used to be known as the OPRA number.

Trustee – A trustee is a person or Company acting separately from an employer, who holds assets for the beneficiaries of the scheme. Trustees are responsible for ensuring that the pension scheme is run properly and that members’ benefits are secure. They must follow the laws that apply to trusts.

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W

Welcome Pack – A personal information pack detailing the Assistance payable to the member or beneficiary.

Wind-Up – A wind-up occurs when a scheme is terminated and the assets are used to secure members benefits elsewhere, often by the purchase of annuities from an insurance company. When wind-up has been completed the scheme ceases to exist.

Wound-Up – Where a scheme has completed wind up and liabilities have been discharged.

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