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Glossary

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

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Accrual Rate
In a defined benefit pension scheme this is the rate at which pension benefits build up for the member. They will get a certain amount for each year of pensionable service.
Active Member
A member of a pension scheme who is in active pensionable service.
Assessment Period
The time when a scheme is being assessed to see if the Pension Protection Fund can assume responsibility for it.
Assets
These are everything that the trustees hold for the pension scheme. They can include investments, bank balances and any amounts owed to the scheme.
Caseworker
The PPF employee assigned to work with the trustees of schemes as they progress through the assessment period.
Compensation
The payments made by the Pension Protection Fund to scheme members
Compensation Cap
Compensation payable to deferred PPF members is capped at a level that changes annually.
Consumer Prices Index (CPI)
The general index of consumer prices published by the Office of National Statistics. The increases to PPF compensation in deferment and payment for certain periods of service are linked to CPI. Please see FAQs for further details.
Deferred Member
A member of a pension scheme who is no longer in service, but will receive a benefit in the future.
Defined Benefit (DB) Scheme
Also known as a final salary scheme. These are schemes where the final benefit is known to the member and is usually calculated through a formula using incorporating wages and length of service. Only DB schemes are eligible for coverage by the PPF.
Defined Contribution (DC) Scheme
Also known as a money purchase scheme. In these schemes, the member will not know the final benefit. Benefit levels can depend on the success of investment returns and annuity rates
Independent Trustee
A trustee who has no connection to the scheme, the employer or members Independent trustees may well be appointed to a scheme when the employer is bankrupt.
Indexation
The way in which payments may be adjusted with reference to changes in the retail prices index.
Insolvency Event
A qualifying insolvency event must happen to a company before its scheme can be considered for the PPF.
Liabilities
Amounts that a pension scheme will have to pay now and in the future. The most common liability is paying pensions.
Pensioner
A scheme member who is currently receiving a pension from the scheme.
Retail Prices Index (RPI)
The general index of retail prices published by the Office of National Statistics. The increases to PPF compensation in deferment and payment for certain periods of service are linked to RPI. Please see FAQs for further details.
Revaluation
The name used for increases in deferred compensation.
Section 120 Notice
The form that insolvency Practitioners use when informing the PPF that a company with a pension scheme has suffered an insolvency event.
Section 143 Valuation
The valuation of a scheme carried out by an actuary at the end of an assessment period, which will determine whether or not the scheme can pay its members above PPF levels of compensation.
Trustee
A person responsible for adminstering the assets and liabilities of a pension scheme.