Getting FREE Expert Pension Advice Couldn't Be Easier.

Just Call Our Friendly Team Now:

Get a FREE
No Obligation One-to-One

Consultation with an FCA Regulated Pension Expert

Discuss any pension or investment issue
Get Professional Advice and Recommendations Tailored to Your Specific Circumstances
Call us on 01603268066 to book and Discover the Best Options for Your Financial Future

Pension Glossary - Understand the Terms Used For UK Pensions - 'A' Terms

Richard Beardsworth Pension Expert

By Richard Beardsworth.

Independent Financial Advisor

Understand the terms used for UK pensions in this free jargon busting pension glossary

ABI 1994 Method

This is a test to work out whether the benefits paid by a money purchase scheme are more than the Inland Revenue limits. It does not apply to a small self-administered scheme.

Accrual Rate

In a defined benefit 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.

Accrued Benefits

These are the pension benefits that have built up for a pension scheme member.

Accumulated Assets

The total value of assets accumulated in a pension fund.

Accumulated Benefit Obligation (ABO)

The actuarial present value of benefits, vested and non-vested, attributed to the pension formula to employee service rendered to a particular date, based on current salaries.

Accumulated Contributions

These are all the contributions a member has paid, plus anything extra the money has earned. In a money purchase scheme, these can include the employer's contributions.

Accrued Rights

This term is sometimes used to mean accrued benefits.

Active Investment Management

This is a system of investment that could be used for a pension fund. It involves buying and selling particular investments to try and get better growth.

Active Member

This is a member of an occupational pension scheme who is building up pension benefits from their present job.

Actuarial Assumptions

These are the figures and estimates that an actuary uses when they make an actuarial valuation. This can include how long people are expected to live, price rises, how much people are expected to earn, and the income from the pension scheme investments.

Actuarial Deficiency

This is where the actuarial value of a scheme's assets is less than the actuarial liability. The actuarial deficiency is the difference between the two.

Actuarial Increase

This is the extra pension benefit a member gets when retiring after the normal retirement age.

Actuarial Liability

This is the money a pension scheme will have to pay out for pensions after the date of the actuarial valuation.

Actuarial Reduction

This is a drop in a member's pension because they have taken their pension early.

Actuarial Report

This is a report on an actuarial valuation. This name is also used for when an actuary says how changes to a scheme might affect it financially.

Actuarial Surplus

This is where the actuarial value of a scheme's assets is more than the actuarial liability. The actuarial surplus is the difference between the two.

Actuarial Valuation

This is an assessment done by an actuary, usually every three years. The actuary will work out how much money needs to be put into a scheme to make sure pensions can be paid in the future.

Actuarial Value

This is the value an actuary puts on something.

Actuary

An actuary is an expert on pension scheme assets and liabilities, life expectancy and probabilities (the likelihood of things happening) for insurance purposes. An actuary works out whether enough money is being paid into a pension scheme to pay the pensions when they are due.

Added Years

This is when a member of a defined benefit pension scheme becomes entitled to extra pension benefits because:

  • a transfer payment has been made by another scheme;
  • an additional voluntary contribution has been paid; or
  • the member's pension benefits have been improved by the employer or the pension scheme (or both).

Additional Component

This is another name for additional pension.

Additional Pension

This is what the Government sometimes calls the pension paid by SERPS (or its replacement, the State Second Pension)

Additional Voluntary Contribution (AVC)

This is an extra amount (contribution) a member can pay to their own pension scheme to increase the future pension benefits.

Administrator

This is the person who is responsible for managing a pension scheme from day to day.

Allocation Option

This allows a pension scheme member to give up some pension benefits in return for a pension for the member's husband, wife or dependants.

Annual Pension Estimate

This is similar to a benefits statement. This is a statement of the pension benefits a member has earned. An annual pension estimate will be based on certain expectations or predictions, so the benefits the member actually gets will probably be different.

Annual Report

This is a report that the trustees of an occupational pension scheme send to members and employer's each year to keep them informed on the scheme.

Annuitant

This is a person who receives, or is entitled to, an annuity.

Annuity

This is a fixed amount of money paid each year until a particular event (such as a death). It might be split into more than one payment, for example monthly payments. Many schemes use an annuity to pay pensions. When someone retires, their pension scheme can make a single payment, usually to an insurance company. This company will then pay an annuity to the member. The money paid to the member is what people usually call their pension.

Annuity Rate

This compares the size of an annuity (how much it pays each year) with how much it cost to buy. It also takes into account the age of the annuitant.

Appropriate Scheme

This is a pension scheme which meets conditions set by the Contributions Agency. This means that a member of the scheme can contract out of the State Second Pension.

Approval

This is when the Pension Schemes Office (PSO) says that a scheme is suitable for tax relief. This means members can count some or all of their contributions against their tax bill. If a scheme meets certain conditions, it will get mandatory (automatic) approval. If the scheme does not meet the conditions, the PSO may give it discretionary approval.

Approved Occupations List

The Pension Schemes Office (PSO) does not normally allow a scheme to pay a pension before a member is 50 (or 60 with a retirement annuity). With some jobs, the PSO may allow a lower pension age. One example might be professional footballers, whose earnings are mostly early in their life. These jobs are called recognised occupations. The PSO has an approved occupations list to show which jobs are recognised occupations.

Approved Scheme

This is either a personal pension scheme or a free-standing additional voluntary contribution (FSAVC) scheme that has got approval from the Pension Schemes Office (PSO). The term approved scheme is not used for occupational pension schemes, even though they can get approval from the PSO.

Assets

These are everything that the trustees hold for the pension scheme. They can include investments, bank balances, and debtors.

Auditor

This is a qualified person who checks accounts. If an auditor believes the law has been broken in an occupational pension scheme, they must tell the Occupational Pensions Regulatory Authority (OPRA). This is called whistleblowing.

Augmentation

This is when extra pension benefits can be bought for a pension scheme member. They are usually paid for by the employer or the pension scheme.

Average Earnings Scheme

This is another name for a career average scheme. This is a scheme where the pension benefits earned for a year depend on how much the member's pensionable earnings were for that year.

Call Us to Speak to a Pension Expert Now. The Initial Consultation Is Absolutely Free!

Our panel of FCA Approved Pension Experts Will Help You:

  • Free Initial Assessment of Your Current Pension Funds
  • Find Out Your Projected Retirement Income
  • Understand The Most Appropriate Alternative Investments
  • Find Out How The Latest Pension Changes Affect You
  • Release Cash From Your Pension
  • Discover The Benefits of Changing Pension Providers
Speak to an FCA Approved Pension Expert Right Now.

Or, Book Your FREE One-to-One Pension Appraisal here: Enquiry Form Request Call Back

Local call rate, free with inclusive mobile minutes. 01603268066

For Your Protection!

This page has been approved by an independent compliance officer

Got a Burning Question?

Ask us a Pension or Investment question - We’ll get right back to you with the answer.

Find Out What Your Pension Options Really Are: Get a complete review of your pension pot and expert advice completely free

Simply fill in your details below to find out the most suitable options for your retirement fund...

Call now
for free expert help

01603268066

Local call rate, free with inclusive mobile minutes.

Telephone

01603268066

Address

8 Eaton Court Road, Colmworth Business Park,
St. Neots, Cambridgeshire, PE19 8ER

Pension Transfer Experts Logo