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Revalued earnings scheme meaning
Published by a LexisNexis Pensions expert
What does Revalued earnings scheme mean?
An occupational pension arrangement (usually defined benefit) in which a member’s benefits are calculated by reference to earnings that are revalued over a specified period (often the whole career), rather than by reference to final salary. In practice, each year’s pensionable earnings are uprated to retirement by an index or fixed rate set in the scheme rules or regulations (commonly CPI, RPI or a fixed percentage) and an accrual rate (for example 1/60th) is applied, producing benefits on a career average revalued earnings (CARE) basis.
The phrase is descriptive. However, “career average revalued earnings” is used in UK public service pensions legislation, and scheme regulations prescribe the revaluation method. Across England & Wales, Scotland and Northern Ireland, most reformed public service schemes operate on a CARE basis under the Public Service Pensions Act 2013 and related legislation. In Ireland, the Single Public Service Pension Scheme also uses a career‑average model with annual revaluation, and private occupational schemes may adopt similar structures. Statutory revaluation of preserved (deferred) benefits remains separately governed (UK: Pensions Act 1993; Ireland: Pensions Act 1990).
Key issues for advisers include the revaluation index, caps/floors, breaks in service, definition of pensionable pay and interaction with indexation in payment.
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View the related Practice Notes about Revalued earnings scheme
PRACTICE NOTES
Reformed Teachers’ Pension Scheme 2015 (England and Wales): legal framework, governance, funding (cost cap/SCAPE), eligibility, contributions, benefits and McCloud remedy
What is the Teachers’ Pension Scheme? The Teachers’ Pension Scheme (TPS) is a statutory public service pension arrangement for members of the teaching profession in England and Wales. Since 1 April 2015, the TPS has consisted of two schemes: The reformed TPS (often described in TPS literature as the ‘2015 Scheme’), established on 1 April 2015 under the Public Service Pensions Act 2013 (PSPA 2013) as a career average revalued earnings (CARE) scheme. This Practice Note concerns that scheme. The legacy TPS, created by the Superannuation Act 1972 (SA 1972) as a final salary scheme for those who joined before 1 April 2015. It closed to future accrual on 31 March 2022, while retaining a final salary link within that scheme. For more, see Practice Note: The legacy Teachers’ Pension Scheme. Separate schemes operate in Scotland and Northern Ireland and are outside the scope of this Practice Note. When the reformed TPS launched, the government acted to close the legacy TPS to...
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PRACTICE NOTES
Reformed NHS Pension Scheme 2015 (England and Wales): statutory framework, governance and funding, contributions, CARE benefits, McCloud remedy, membership, survivor benefits, flexible retirement, transfers, outsourcing and GMP indexation
What is the National Health Service Pension Scheme? The NHSPS is an unfunded public service occupational pension that delivers salary‑related, defined benefit (DB) retirement provision for health service staff. The reformed NHSPS (often termed the ‘2015 Scheme’) began on 1 April 2015 as a career average revalued earnings (CARE) arrangement. New starters since that date have joined this scheme, which is the focus of this Practice Note. The legacy NHSPS (the ‘1995/2008 Scheme’) consists of two separate final salary sections—the 1995 Section and the 2008 Section—both closed to future accrual, while preserving a final salary link within that scheme. For further details, see Practice Note: The legacy National Health Service Pension Scheme. There are distinct schemes in Scotland and Northern Ireland, which are not covered by this Practice Note. When the reformed NHSPS opened, the government acted to close the 1995 and 2008 Sections to future accrual, subject to: ...
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PRACTICE NOTES
Legacy Teachers’ Pension Scheme (England and Wales): statutory framework, final salary benefits, contributions, governance, eligibility and the McCloud remedy
What is the Teachers’ Pension Scheme? The Teachers’ Pension Scheme (TPS) is a statutory public service pension scheme for members of the teaching profession in England and Wales. Since 1 April 2015, the TPS has consisted of two distinct schemes: the reformed TPS (often described in TPS literature as the ‘2015 Scheme’), introduced on 1 April 2015 under the Public Service Pensions Act 2013 (PSPA 2013) as a career average revalued earnings (CARE) scheme for those joining on or after 1 April 2015. For further information, see Practice Note: The reformed Teachers' Pension Scheme the legacy TPS, set up under the Superannuation Act 1972 (SA 1972) as a final salary scheme for members who joined before 1 April 2015. This scheme is the subject of this Practice Note Be aware there are separate schemes in Scotland and Northern Ireland, which are not covered by this Practice Note...
21 May
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