When you join FPS 2015, a pension account will be opened for you and it will remain open for as long as you are a contributing member of the scheme. This is called an "active member's account".
If you are an active member in more than one employment at the same time, you will have an active member's account for each employment.
Your pension will build up year on year as follows:
1/59.7 x pensionable pay = earned pension credit
Let's suppose your pensionable pay plus any assumed pensionable pay during your first scheme year is £29,850. Your earned pension for that year would be:
1/59.7 x £29,850.00 = £500.00
To this would be applied an "index adjustment". This would be a percentage increase or decrease specified in an Order issued by HM Treasury, reflecting any national change in average weekly earnings. It is applied to ensure that the pension which you hold in your account each year maintains its value on a year by year basis.
If during the scheme year you have been on leave, on reduced contractual pay or no pay due to sickness or injury, or have been on relevant paid child related leave or reserve forces leave then for that period your pension is based on your assumed pensionable pay.
An example of how your pension will build up in your Pension Account each year is shown below:
| Date From | Date to | Account Balance(starting) | HM Treasury Order Rate* | Opening Balance | Actual Pay | Build up Rate | Pension Build up in year | Account Balance (Closing) |
|---|---|---|---|---|---|---|---|---|
| 01/04/2015 | 31/03/2016 | 0.00 | 0.00 | 29,850 | 1/59.7 | 500.00 | 500.00 | |
| 01/04/2016 | 31/03/2017 | 500.00 | 3% | 515.00 | 30,447 | 1/59.7 | 510.00 | 1025.00 |
| 01/04/2017 | 31/03/2018 | 1025.00 | 4% | 1066.00 | 31,000 | 1/59.7 | 519.26 | 1585.26 |
*Rates shown are for illustration only
Your active member's account would continue to build in this way for so long as you remain an active member of the scheme. Also, if you were to remain an active member beyond the scheme's normal pension age (60), an "age addition", i.e. an additional amount of pension, calculated in accordance with the guidance of the Scheme actuary, would be added.
If you cease to be an active member before becoming entitled to immediate payment of pension, your active member's account would be closed and your accrued earned pension transferred to a "deferred member's account"