British Steel Pension Scheme
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Useful Terms

Additional Voluntary Contributions (AVCs)

Defined Benefit AVCs are paid in addition to standard pension contributions and are used to purchase extra years of Pensionable Service in the Scheme.  For each additional year of pensionable service purchased by paying AVCs a member is entitled to a pension of 1/60th of final earnings.  Months are included as part-years.  This increases the member's pension, tax free lump sum and any allowances paid to spouses and dependant children.

New AVCs of this kind are not available and no amendments can be made to existing contracts.

See Top Up Contributions for details of the Scheme's Defined Contribuion AVC arrangement.

Annual Allowance (AA)

An annual limit set by the Government on the amount of pension savings from all sources that can be built up tax efficiently each year. The Annual Allowance is currently £40,000.   Any pensions savings in excess of the Annual Allowance will be taxed at your highest rate of marginal income tax.

You may pay into any number of pension arrangements, tax efficiently , up to the Annual Allowance giving you flexibility in how you save for your retirement.

Any individual who accesses their pension benefits under one of the defined contribution flexible options will have a £10,000 money purchase Annual Allowance applying to any further defined contribution pension savings.

  • If this £10,000 money purchase Annual Allowance is not exceeded then the £40,000 Annual Allowance applies to the member's total pension savings in the normal way; but
  • If it is exceeded, the £10,000 Annual Allowance applies to defined contribution pension savings and a reduced £30,000 Annual Allowance applies to Standard Section (i.e. defined benefit) pension savings.

Civil Partner

A party to a registered Civil Partnership as defined in the Civil Partnership Act 2004

Contracted Out

Contracted-out of the State Second Pension - S2P (formerly the State Earnings Related Pension Scheme - SERPS).  The Scheme is currently contracted out.  Contracting out ends on 5 April 2016.

Consumer Prices Index (CPI)

CPI is a measure of inflation which measures the change in the costs of a fixed basket of retail goods (excluding the cost of mortgages and council tax)

Data Protection

The Scheme is registered under The Data Protection Act 1998 and the Trustee of BSPS holds personal data about you to administer the Scheme membership and benefits.  A formal Privacy Statement has been created setting out the Trustee's commitment to comply with the requirements of the Data Protection Act 1998 to ensure the safe and appropriate use of data it holds in respect of individuals.


Your dependants can be any of the following:

  • your widow/widower/civil partner;

  • your children or grandchildren;

  • your grandparents and the grandparents of your widow/widower/civil partner, and the grandparents of any previous ore deceased wife or husband of yours;

  • your parents, uncles, aunts and cousins, and the parents, uncles, aunts and cousins of your widow/widower/civil partner, and the parents, uncles, aunts and cousins of any previous or deceased wife or husband of yours, and the spouses of any such uncles, aunts and cousins;

  • any person (whether they are 18 or not) to whom you have at any time put yourself in the role of a parent or their children, and any person who held you in role of a parent of their children.

  • Any person who the Trustee consider was wholly or partly dependent on or financially inter-dependent with your earnings at the time of your death – such as a ‘common law’ partner, fiancé or fiancée, living at the same address – may also qualify in these circumstances. But please note that no spouse’s pension would be payable


Generally, your gross earnings (i.e. before tax and any other deductions) for any scheme year. Abnormally wide variations in non-basic pay elements such as bonus and overtime will be averaged over 3 years. One-off payments (such as outstanding holiday pay) are generally excluded.  A Scheme specific earnings cap applies to those members who joined the Scheme on or after 1 June 1989.  The 2014/15 Scheme specific earnings cap is £142,300 which will be reviewed annually by the Principal Company.


The “Principal Company”, Tata Steel UK Limited, and every Participating Company in the Scheme

Final Pensionable Earnings

For service up to and including 31 March 2012, generally your highest Pensionable Earnings for any one scheme year during your last five years of scheme membership.  

Final Pensionable Earnings (2012)

For service on or after 1 April 2012 only, calculated by reference to an average of the highest 3 consecutive years Pensionable Earnings (2012).

Guaranteed Minimum Pension (GMP)

This is the minimum level of benefit the Scheme must provide for members of the Scheme who were contracted out of the State Earnings Related Pension Scheme.  If you were an employee member of the BSPS between 6 April 1978 and 5 April 1997 part of your Scheme pension is Guaranteed Minimum Pension (GMP). GMP broadly mirrors the amount of earnings related pension you would have received from the State had the BSPS not been contracted-out. 


This means that a Member or former Member is unable to carry out any gainful employment due to physical or mental Incapacity and is likely to remain permanently unable to do so.

Lifetime Allowance (LTA)

When you retire the value of your pension benefits from all sources will be tested against the LTA. The test takes into account all your pension benefits in payment, and any other pension benefits you may have coming into payment at the same time as your Scheme benefits (except your state pension, which you can build up without paying extra tax).  You must advise the Pensions Office of the value of your other pension benefits when you retire. 

If the value of your benefits when you retire is more than the Lifetime Allowance you will generally have to pay a tax recovery charge on the excess.  The standard Lifetime Allowance is set by the Government and is currently £1 million.

Longevity Adjustment Factor

For service from 1 April 2012 only, a longevity adjustment factor will be applied to benefits coming into payment from 1 April 2015 onwards to protect the Scheme in circumstances where actual life expectancy for the membership is greater than that assumed by the Trustee.

Normal Pension Age

Age 65

Pensionable Earnings

Generally, your gross earnings in any Scheme Year less an offset (equal to £4,004 for 2014/15 Scheme year)

Pensionable Earnings (2012)

For service on or after 1 April 2012 only, your gross earnings in any Scheme Year less an offset (equal to £4,004 for 2014/15 Scheme year), subject to a fixed cap of £100,000 per annum.

Pensionable Earnings Growth Cap

A cap applies to limit any growth in pensionable earnings in the Standard Section to a maximum of 1.75% a year.  Any excess in pensionable earnings growth above the cap will be pensionable within the Defined Contribution Section.

Pensionable Service

The number of years, months and days that you have been a Member of the Scheme

Postponed Pensioner

An employee over age 65 who elects to stop paying contributions and accruing future service in the Scheme and who is not in receipt of a Scheme pension.

Principal Company

Tata Steel UK Limited

Qualifying Service

The aggregate of all member's service in the Scheme and any other period of service that may count for pension purposes.

Retail Prices Index (RPI)

RPI is a measure of inflation which measures the change in the costs of a fixed basket of retail goods (including the cost of mortgages and council tax)

Scheme Actuary

The professional adviser appointed by the Trustee to advise on the funding of the Standard Section and associated financial costings.

Scheme Year

The period from 1 April to 31 March each year.

SMART Pension

is a choice available to you from your employer to pay standard pension contributions in a more tax efficient way.  Under SMART Pension basic salary is reduced by the standard employee contribution rate and the employer pays an equivalent amount to the Scheme on the member's behalf.

State Pension Age

The age at which you become entitled to receive State pension benefits. 

State pension age is currently age 65 for men. State pension age for women is currently being equalised with that for men and will reach age 65 by November 2018.  The State pension age will then increase to 66 for both men and women from December 2018 to October 2020. Under current legislation the State Pension Age is due to rise to 67 between 2034 and 2036 and to 68 between 2044 and 2046. Further increases are planned.

 Top Up Contributions (TUCs)

 An option for Members to make additional voluntary contributions.

TUCs Member Account

This is made up of the TUCs paid under the Scheme by a Member and any investment returns they receive.


The B.S. Pension Fund Trustee Limited which administers the Scheme in accordance with the terms of its Trust Deed and Rules.


The surviving legal spouse.