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Table of ContentsThe A to Z of pension (Last update: 30 May 2003)..1A message from our founder, Chrissie Maher A to Z of pension terms(Click here to skip straight to the guide.)(Last update: 30 May 2003)This is a layman s guide to some common terms used by the pensions industry. This guide hasbeen written for you, the ordinary person, to give you a fighting chance of understanding the termsused by your pension company. Words which have their own definition in the guide are highlightedas a link. Just click on them to go to the definition. Please do not get disheartened by the size of theguide. Only certain parts will apply to most of you, so look at your pension policy or other pensiondocuments to see which words you feel need some further message from our founder, Chrissie Maher OBET hank you for using Plain English Campaign s A to Z of pension terms.

This is a payment the DSS made to certain personal pension schemes or contracted out occupational pension schemes. It was 2% of the memberˇs upper band earnings.

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1 Table of ContentsThe A to Z of pension (Last update: 30 May 2003)..1A message from our founder, Chrissie Maher A to Z of pension terms(Click here to skip straight to the guide.)(Last update: 30 May 2003)This is a layman s guide to some common terms used by the pensions industry. This guide hasbeen written for you, the ordinary person, to give you a fighting chance of understanding the termsused by your pension company. Words which have their own definition in the guide are highlightedas a link. Just click on them to go to the definition. Please do not get disheartened by the size of theguide. Only certain parts will apply to most of you, so look at your pension policy or other pensiondocuments to see which words you feel need some further message from our founder, Chrissie Maher OBET hank you for using Plain English Campaign s A to Z of pension terms.

2 This guide is designed togive you a fighting chance in the baffling world of aren t very glamorous, or very sexy, but they are desperately important. You can survivewithout a car, you can just about get by without buying a house, but if you aren t properly preparedfor retirement, the final years of your life could be utter we explain the aims of this guide, it s important to understand what it isn t. It isn t acomprehensive definition of the law. It isn t a dictionary. And it certainly isn t an s simply a s really not that different to an A to Z of London or Manchester. They show you where places are,and the different roads you can take. But they don t tell you where you should go or how youshould get there.

3 Similarly, we can show you the choices available in the world of pensions, but wecan t tell you what you should list of terms is not comprehensive, and the explanations are entirely our own. There are manywords that we left out for this first edition. These include terms to do with rules that no longer applyand terms that will mainly affect the people running schemes (particularly the accountants). Andthere were even terms that are just so complicated that we haven t yet produced a clear enoughexplanation to satisfy the ordinary people we tested it on. But we won t give up working on guides are just the humble beginnings of a process that may never be complete. Our dreamis that anyone should be able to read a pension term and understand it, safe in the knowledge thatevery pension company has the same understanding of the term.

4 Our only hope is that our twoguides are the first step towards that any reader, pension firm or other group has suggestions, corrections, clarifications or evencomplaints, please don t be afraid to let us know. Only with your feedback can we improve andupdate the guides, both in future print runs, and through our to the following people for their help and support:Stephen Timms MP, Sally Bark, John Nightingale and Michael Robinson at the Departmentof Social Security. Caroline Instance and David Cresswell at the Occupational Pensions Regulatory Authority. Stephanie Hawthorne at Pensions World. Everyone from the Pensions Education Working Group. Deborah Bagnall and Mike Garner at Pannell Kerr Foster.

5 Peter Wood at Premier Promotions. CopyrightPlain English Campaign owns the copyright on this guide. You may save one copy of the guide todisk, and print one copy out for your personal use. You may not make more than one copy withoutour have listed the terms in alphabetical order. Where a term has a common abbreviation, we havelisted the term as if it is spelt out in full. If you do not know what an abbreviation means, this list willhelp you find the term in our voluntary contributionCPAC ompulsory purchase annuityCOEGC ontracted Out Employments GroupCOMPSC ontracted out money purchase schemeCOSRSC ontracted out salary related schemeDWPD epartment for Work and PensionsEPBE quivalent pension benefitEPPE xecutive pension planFSAF inancial Services AuthorityFSAVCFree standing additional voluntary contributionFURBSF unded unapproved retirement benefits schemeGPPG roup personal pensionGMPG uaranteed minimum pensionIDRI nternal dispute resolutionIFAI ndependent financial advisorIMROI nvestment Management Regulatory AuthorityLISAL ifelong individual savings accountPlain English Campaign.

6 Issues and subjects: Pensions and plain English2 LPIL imited price indexationMFRM inimum funding requirementMNDM ember nominated directorMNTM ember nominated trusteeMVAM arket value adjustmentNBVNet book valueNPAN ormal pension ageNPDN ormal pension dateNRAN ormal retirement ageNRDN ormal retirement dateOPASP ensions Advisory Service (Previously 'Occupational Pensions Advisory Service')OPBO ccupational Pensions BoardOPRAO ccupational Pensions Regulatory AuthorityPAYGPay as you goPCBP ensions Compensation BoardPIAP ersonal Investment AuthorityPPCCP ersonal pension contributions certificatePPIP ooled pension investmentPPSP ersonal pension schemePSOP ension Schemes OfficePTRASP ension tax relief at sourceSDCSS implified defined contribution schemeSERPSS tate earnings related pension schemeSFOS uperannuation Funds OfficeSIBS ecurities and Investments BoardSIPPSelf invested personal pensionSORPS tatement of recommended practiceSRDS elected retirement dateSSP (or S2P)

7 State second pensionTVTransfer valueUELU pper earnings limitUURBSU nfunded unapproved retirement benefits schemeWGMPW idow s (or widower s) guaranteed minimum pensionClick on any letter to go to that section. The terms highlighted as links have their own definition. Click on them to move to the definition. A B C D E F G H I K L M N O P Q R S T U V W Numbers2% incentivePlain English Campaign: Issues and subjects: Pensions and plain English3 This is a payment the DSS made to certain personal pensionschemes or contracted out occupational pension schemes. Itwas 2% of the member s upper band earnings . Thesepayments were stopped on 5 April 89 memberThis is another name for a class B member.

8 This is when anoccupational pension scheme was set up before 14 March1989, and the member joined it between 17 March 1987 and 31 May (Back to the top.)ABI 1994 methodThis is a test to work out whether the benefits paid by a moneypurchase scheme are more than the Inland Revenue limits. Itdoes not apply to a small self administered rateIn a defined benefit scheme this is the rate at which pensionbenefits build up for the member. They will get a certain amountfor each year of pensionable benefitsThese are the pension benefits that have built up for a pensionscheme contributionsThese are all the contributions a member has paid, plusanything extra the money has earned. In a money purchasescheme, these can include the employer s rightsThis term is sometimes used to mean accrued investmentmanagementThis is a system of investment that could be used for a pensionfund.

9 It involves buying and selling particular investments to tryand get better memberThis is a member of an occupational pension scheme who isbuilding up pension benefits from their present assumptionsThese are the figures and estimates that an actuary uses whenthey make an actuarial valuation. This can include how longpeople are expected to live, price rises, how much people areexpected to earn, and the income from the pension deficiencyThis is where the actuarial value of a scheme s assets is lessthan the actuarial liability . The actuarial deficiency is thedifference between the increaseThis is the extra pension benefit a member gets when retiringafter the normal retirement liabilityThis is the money a pension scheme will have to pay out forpensions after the date of the actuarial reductionThis is a drop in a member s pension because they have takentheir pension reportThis is a report on an actuarial valuation.

10 This name is alsoused for when an actuary says how changes to a scheme mightaffect it surplusThis is where the actuarial value of a scheme s assets is morethan the actuarial liability . The actuarial surplus is thePlain English Campaign: Issues and subjects: Pensions and plain English4difference between the valuationThis is an assessment done by an actuary, usually every threeyears. The actuary will work out how much money needs to beput into a scheme to make sure pensions can be paid in valueThis is the value an actuary puts on actuary is an expert on pension scheme assets andliabilities, life expectancy and probabilities (the likelihood ofthings happening) for insurance purposes.


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