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Annual Allowance

This is the maximum amount of tax-free pension savings that you can build up over a Pension Input Period (PIP). These include any contributions paid by you or the Company into the Plan. The Plan’s PIP is the tax year.

Annuity

If you are a member of a money purchase section of the Plan, this is the pension that can be bought with the value of your Pension Fund at retirement.

Contracted-out benefits

The minimum level of benefits which have to be provided because all sections of the Plan (except the Auto Enrolment Section) were contracted out of the earnings related component of the State Pension Scheme up to 5 April 2016.

Dependent children

Any child under the age of 18 or (at the discretion of the Trustee) under the age of 23 if in full-time education, or vocational training who is your own, adopted, a stepchild or conceived but unborn when you die. Any other child who is, in the opinion of the Trustee, financially dependent on you may also qualify. If a child is permanently disabled, the Trustee may decide to pay a pension for as long as the disability continues.

Final Pensionable Salary

Calculated at the date on which you retire, die or leave, the definition of final pensionable salary depends on which section you are a member of:

Section Final Pensionable Salary
Civil Service Classic The greater of:
or
  • Your highest average annual rate of pensionable salary for any three consecutive years ending in the last ten years of pensionable service.
Civil Service Premium The greater of:
or
  • Your highest average annual rate of pensionable salary for any three consecutive years ending in the last ten years of pensionable service.
Extel Your highest pensionable salary in any consecutive period of 12 months in the last 5 years.
Final Pay The greater of: or
  • Your highest annual average rate of pensionable salary for any 3 consecutive years ending in the last 10 years of pensionable service.
Financial Times The greater of: or
  • Your highest annual average rate of pensionable salary for any 3 consecutive years ending in the last 10 years of pensionable service.
Longman The greater of: or
  • Your highest annual average rate of pensionable salary for any 3 consecutive years ending in the last 10 years of pensionable service.
Pearson Your basic pay in the previous 12 months.
Penguin The greater of: or
  • Your highest annual average rate of pensionable salary for any 3 consecutive years ending in the last 10 years of pensionable service.
TQ Section
  • Classic Member
    • the highest Pensionable Salary over any Scheme Year in the last three years prior to the date of calculation.
  • Classic Plus or Premium Member the greatest of:
    • Pensionable Salary in the last 12 months prior to the date of calculation;
    • the best Pensionable Salary in the last four Scheme Years [adjusted for inflation] up to the date of calculation; and
    • Pensionable Salary plus pensionable bonuses averaged over any 3 consecutive Scheme Years in the preceding 13 Scheme Years prior to the date of calculation.

Guaranteed Minimum Pension (GMP)

This is the minimum level of benefits the Plan must provide for contracted out service up to April 1997.

Lifetime Allowance (LTA)

The tax-free limit on the total value of your pension savings from all sources. The LTA is £1 million in the tax year 2017/18.

Pension Fund

If you are a member of a money purchase section of the Plan, the value of your both your own and the contributions paid by the Company on your behalf.

Pension Quality Mark (PQM) PLUS

The Pearson Group Pension Plan has been awarded the National Association of Pension Funds' (NAPF) Pension Quality Mark PLUS for its for the Money Purchase 2003 section arrangements. The Pensions Quality Mark is designed to create a benchmark and applaud employers for high calibre money purchase pension schemes which encourage members to save for retirement.

In order to achieve this prestigious new award the NAPF has to be satisfied that a scheme is well-managed with good member communication and high levels of contributions. The three core tests which we needed to meet to gain the Pension Quality Mark were:

  1. Contributions: contributions of 10% must be available, with at least 6% paid by the employer. Because of the Money Purchase 2003 section’s high contribution rates (from age 45, 8% member and 16% employer contributions) we have received the highest award, a Pension Quality Mark PLUS.
  2. Governance: governance arrangements must be in place to ensure that the scheme is operating in the best interests of members.
  3. Communications: the scheme must provide clear and simple information to members when they join the scheme and thereafter.

The NAPF will monitor schemes which have gained the award to ensure that they continue to meet the required standards.

Pensionable Salary

The definition of pensionable salary depends on which section you are a member of:

Section Pensionable Salary
Auto-Enrolment section Your basic salary at 1 April each year, restricted in accordance with the Plan Earnings Cap.
Civil Service Classic / Civil Service Premium Your basic salary at 1 April each year, restricted in accordance the Plan earnings cap.
Extel Your annual rate of basic salary, excluding any overtime, commission, expenses, bonus and shift pay, restricted in accordance with the Plan Earnings Cap.
Final Pay Your basic salary at 1 April each year, restricted in accordance with the Plan Earnings Cap.
Financial Times Your basic salary at 1 July each year, less an amount equal to 1.5 x the lower earnings limit for National Insurance contributions, restricted in accordance with the Plan Earnings Cap.
Longman Your gross salary at 1 April, restricted in accordance with the Plan Earnings Cap, less an adjustment based on multiples of the single person's Basic State Pension. The adjustment depends on your membership category:
Category Adjustment
ORDM 1.5 x Basic State Pension
SSM 1.5 x Basic State Pension
LOM 1 or 1.5 x Basic State Pension
Money Purchase 2003 Your basic salary at 1 April each year as notified by the Company, restricted in accordance with the Plan Earnings Cap.
Penguin Your basic salary at 1 April each year, restricted in accordance with the Plan Earnings Cap, less a deduction equal to 1.5 x the State pension adjustment. The State pension adjustment will be the lower of:
  • The annual Basic State Pension payable to a single person;
or
  • The annual lower earnings Limit for National Insurance contributions.
TQ Section Your basic annual salary or wage plus allowances as determined by the Employer together with any other element of pay which was pensionable under the PCSPS at the time your employment was transferred to TQ.

Plan

Pearson Group Pension Plan.

Plan earnings cap

£154,200 a year for the 2017/18 tax year.

This applies to members who joined the Plan from 1 June 1989.

Qualifying service

Contributory service in the Plan, plus any service in respect of which a transfer has been made to the Plan from a previous pension arrangement.

Qualifying Earnings

Your earnings (including such items as may be specified by the Company and Trustee) between a minimum (£5,876 a year for the 2017/18 tax year) and a maximum (£45,000 for the 2017/18 tax year).

Revalued fluctuating earnings

For members of the Extel section, this is your annual gross pay less the annual amount of your pensionable salary, revalued broadly in line with national average earnings from the year they were received to the 5 April before pensionable service ceases.

State Pension Age

The age you will receive your State Pension. If you are a man this is between age 65 and 68 and if you are a woman this is between age 60 and 68, depending on your date of birth.

State Second Pension (S2P)

S2P replaced the State Earnings Related Pension Scheme (SERPS) in 2002 and ceased in April 2016.

Trustee

The Trustee is responsible for looking after the assets of the Plan on behalf of the beneficiaries.