6 April 2006 - from A-Day the new regime regulating pensions in the UK came into force.

The methods developed for applying fundamental accounting concepts to financial transactions for determining both the accounting period in which income and expenditure should be recognised and the amounts of assets and liabilities in the balance sheet or net assets statement.

The specific accounting bases adopted to present fairly the financial results and position of an organisation.

For a typical larger occupational pension scheme, these might include decisions on accounting for conversion of foreign currency, the valuation of investments and recognition of dividend income and the extent to which the cash basis is used.

The successor organisation to the Accounting Standards Committee which is now responsible for producing accounting standards.

Previously published as Statements of Standard Accounting Practice, accounting standards are now issued by the ASB as Financial Reporting Standards, though the ASB has adopted standards extant at the time it came into existence. Standards are preceded by Discussion Papers and Exposure Drafts (EDs).

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.

The accounting principle whereby revenues and costs are recognised as they are earned or incurred, rather than when money is received or paid.

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

This term is sometimes used to mean accrued benefits.

The total of contributions paid by a member of a pension scheme during a given period, enhanced where appropriate by interest.

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.

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

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.

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.

An enhancement of benefits to compensate for the deferment of pension beyond the normal retirement date.

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.

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.

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.

This is the value an actuary puts on something.

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.

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 pensions scheme (or both).

This is another name for the state scheme additional pension.

This is what the Government sometimes calls the pension paid under the State Second Pension (S2P), that replaced the State Earnings Related Pension Scheme (SERPS) on 6 April 2002.

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

The Annual Allowance (AA)

The Annual Allowance (AA) is the maximum tax-free increase in the value of your pension benefits that is allowed in the Pensions Input Period (PIP). The AA for the 2023/24 tax year is £60,000.

If the AA is exceeded in any particular year, there is a stand-alone tax charge on you

Pension schemes are required to prepare and circulate to members an annual funding statement, no later than 12 months after the end of each scheme year. This must contain a summary of the latest actuarial valuation and subsequent reports to include information on the funding level and any recovery plan and also to indicate the scheme's solvency level and where copies of the statement of funding principles and actuarial valuation can be obtained from.

The amount of pension a retired member receives each year.

This is a report that the Trustees of an occupational pension scheme send to members and employers each year to keep them informed on the scheme

A series of payments, which may be subject to increases, made at stated intervals until a particular event occurs. This event is most commonly the end of a specified period or the death of the person receiving the annuity.

The splitting of the assets of a pension scheme between the various asset classes such as equities, fixed interest and cash. This will primarily reflect the long term needs of the fund, known as the strategic view, but may be adjusted to favour particular asset classes or markets which look attractive in the short term, known as the tactical view.

A process of selecting assets which are likely to generate proceeds approximately equal to the cashflow needed to meet the liabilities as they occur under different economic scenarios.

A technique used to test the effect of different economic scenarios on the assets and liabilities of an occupational pension scheme, the inter relationship between them, the funding ratio and contribution rates.

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

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 Pensions Regulator. This is called whistleblowing.

The provision of additional benefits in respect of particular members of an occupational pension scheme, normally where the cost is borne by the scheme and/or the employer.

Additional Voluntary Contributions. If you are an Active Member of the ITB Pension Funds (Open Fund) these are additional contributions that you can make to the Scheme's AVC arrangements.

A financial statement of the assets and liabilities of an entity at a particular date designed to give a true and fair view of the state of affairs.

A style of investment management where the investment manager is free to invest in all asset classes. This is in contrast to specialist management. Sometimes Trustees will place some constraints on the manager such as not to invest in property or venture capital.

These are earnings between the lower earnings limit for national insurance contributions and the upper earnings limit. S2P (formerly SERPS) is worked out on these earnings. These are also called upper band earnings.

This is a term pension companies use for the basic state pension.

This is what the Government sometimes calls the basic state pension.

This is a pension paid by the Government to people who have enough qualifying years.

A yardstick against which performance is to be judged. Most commonly used to assess the investment performance of a fund or portfolio.

This is a person who is getting pension benefits, or will do so when a particular event happens.

This is a statement of the pension benefits a member has earned. It may also give a prediction of what their final pension might be.

With pension schemes, this is everything the member gets after retiring because they were part of the scheme. It usually means the money paid to the member as their pension. It could also include death benefits. With insurance, this is the money the insurance firm pays out if something happens. For example, a life assurance policy would pay death benefits if the insured person dies.

This is an organisation connected to the DWP. It is in charge of paying state benefits such as Income Support and Jobseeker's Allowance.

A certificate of debt issued by a company, government or other institution. A bond holder is a creditor of the issuer and receives interest at a rate stated at the time of the issue.

The transfer of a group of members from one occupational pension scheme to another.

See "Earnings Cap" and also "Pensions Cap".

The cash value of your pension benefits based on market conditions at the time of the transfer.

A document confirming that a person entitled to a pension is still alive.

This relates to benefits in respect of a deceased member. A child is defined as being under age 16, or if over age 16 (but under age 23) is in full time education approved by the Trustees.

The Civil Partnership Act came into force on 5 December 2005. The Act created a new legal relationship of civil partnership that two people of the same sex can form, by signing a registration document. It is only available to same sex couples, and is not the same as marriage.

The Civil Partnership Act will have an impact on two areas of pension provision:

the retrospective provision of guaranteed minimum pensions;
pension sharing upon divorce.

From 5 December 2005 the ITB Pension Funds will comply with legislation and provide Registered Civil Partners with a pension.

What this means is that if you were to enter into a Civil Partnership the benefit to be paid would be (subject to confirmation from the Department of Works & Pensions as to your surviving Partners eligibility) 50% of your Guaranteed Minimum Pension accrued for any Pensionable Service for active membership of the ITB Pension Funds between 6 April 1988 and your retirement date.

If your Partner does not satisfy the DWP's eligibility for payment of a GMP then no benefits would be payable.

The same ITB Pension Fund pension benefits as ordinarily payable to widows are applicable only in relation to Pensionable Service from 5 December 2005.

The Closed Fund was set-up following the dissolution by Government of 16 of the 24 Industrial Training Boards (and the scope of 4 others severely reduced) during 1982-1983. Members of the Fund whose employment had been affected by the Government action were segregated into the newly formed Closed Fund, where a share of the total assets of the Fund was also segregated and held separately for Closed Fund members. The membership of the Closed Fund was fixed in 1983 and may not be changed.

If you are unsure which Fund you are a member of please see the 'Your Fund' page, available from the left-hand menu (providing you have logged-in).

The giving up of a part or all of the pension payable from retirement for an immediate lump sum.

Factors used to determine the amount of pension which needs to be forgone in order to provide a given lump sum benefit.

This is a scheme organised by an employer to provide pension benefits for their employees.

Placing a significant proportion of the assets of a pension scheme in any single investment. 

The amounts requiring compulsory disclosure and reporting are laid down by PA95.

The pensions term for being a member of both an occupational pension scheme and a personal pension scheme concurrently, or at the same time. From April 2006 you can contribute up to 100% of your annual earnings to pension saving free of tax (but see 'Annual Allowance').

When a member leaves the Fund (but retains his benefits in the Fund) and then resumes membership, the period of service before the break may be aggregated with that after the break.

If someone contracts-out of the State Second Pension (S2P), formerly SERPS, then National Insurance payments are lower. They also pay into an occupational or personal pension scheme which has to meet certain conditions.  Note contracting-out on a DB basis came to an end with effect from 6 April 2016.  

The amount deducted from a person's the State Second Pension Scheme (S2P), formerly SERPS benefits for the period of being contracted out.

See "National Insurance Services to Pensions Industry (NISPI)".

The amount by which the employer's and employee's National Insurance contributions are reduced or rebated in respect of employees who are contracted out by virtue of their membership of an appropriate scheme or an occupational pension scheme.

A pension scheme is contracted out where it provides benefits in place of the State Second Pension Scheme (S2P), formerly SERPS and has been given a contracting out certificate or appropriate scheme certificate by the Contributions Agency. Members are contracted out if they are in employment which is contracted out by reference to an occupational pension scheme or have elected to contract out via a personal pension or FSAVC scheme.

Note contracting-out on a DB basis came to an end with effect from 6 April 2016.   

A pension scheme is commonly called contracted in where it is not contracted out i.e. it provides benefits in addition to SERPS. The term 'contracted in' is not used in PSA93 or PA95.

The Contributions Agency gives this certificate to a pension scheme that meets the conditions to be contracted out.

The CEP is a special payment to the state scheme. It is usually paid when a member with less than two years of qualifying service leaves a contracted out scheme. The member is then counted as having been in the State Second Pension (S2P), formerly SERPS for the time they were contracted out.

The Trustees must prepare a Schedule of Contributions detailing the amounts and timing of pension contributions.

The Schedule must clearly distinguish between future service and deficit contributions made under the terms of a Recovery Plan. The Schedule should extend for the longer of five years or the length of any recovery plan which is required.

Scheme trustees are required to monitor the payments made under the contributions schedule and to take action where payments are not made in due time, ultimately reporting to the Regulator any failure to make payments which is deemed to be of material significance.

The Trustees must prepare a Schedule of Contributions detailing the amounts and timing of pension contributions.

The Schedule must clearly distinguish between future service and deficit contributions made under the terms of a Recovery Plan. The Schedule should extend for the longer of five years or the length of any recovery plan which is required.

Scheme trustees are required to monitor the payments made under the contributions schedule and to take action where payments are not made in due time, ultimately reporting to the Regulator any failure to make payments which is deemed to be of material significance.

The period over which the Standard Contribution Rate has been calculated to remain constant, assuming that the Funding Ratio at the beginning and end of the period is 100 per cent. The Control Period, which is normally one year or more but which could be less than one year, should be specified.

The stated interest rate on a loan stock when it is first issued.

An organisation which undertakes the role of holding and accounting for assets in a portfolio on behalf of an investment manager or trustees.

This may be paid to a member's dependants following the member’s death. It may be a pension or a one-off payment. It could be death after retirement benefit or death in service benefit.

When a Member of the Scheme dies after having left their Employer but has not transferred their pension or when a Member dies after having left the Scheme but has continued working for their Employer.

When a member dies after retirement.

If a member has this option, then their dependants will get some benefits from the scheme if the member dies before starting to get pension benefits. The Scheme Trustees will refer to any Nomination Form that the member may have completed prior to reaching a decision on the distribution of any lump sum benefit.

A loan raised by a company, paying a fixed rate of interest and secured on the assets of a company.

A formal document or part of a document establishing the trusts of a pension scheme.

A legal document which in England and Wales makes it clear that it is intended to be a deed and which, in the case of an individual, is signed in the presence of an attesting witness or, in the case of a corporation, is executed in accordance with company law (s1, Law of Property (Miscellaneous Provisions) Act 1989).

In Scotland, deed has no technical legal meaning, although it is used in practice to describe some documents. These would normally then be executed in accordance with the Requirements of Writing (Scotland) Act 1995.

A deed admitting a new employer to an occupational pension scheme and containing an undertaking by the new employer to comply with the provisions of the scheme.

A deed by which a new trustee is appointed.

Pension schemes that were approved by HM Revenue & Customs at 'A-Day' will by default be deemed registered.

An annuity which commences from a future date.

This is a member who has left a scheme, but will get benefits when they retire. These are called preserved benefits.

When a Member leaves their Employer but does not transfer their pension benefits they have a deferred pension and when a Member leaves the Scheme but continues working for their Employer they have a deferred pension.

When someone stops being an active member of a pension scheme, the pension benefits they have earned become preserved benefits, and the member is now called a deferred pensioner. They will get these benefits at a later date.

See postponed retirement and late retirement.

This is where the rules of the scheme decide how much pension the member will get. There are different ways of working out the size of the pension, but the member will know which system the scheme uses as this will be advised in the Scheme Member Booklet. The ITB Pension Funds is a defined benefit scheme. The most common type of defined benefit scheme is a final salary scheme.

A lump sum paid from a Defined Benefit arrangement on death before age 75, which is measured against the recipient's unused 'Lifetime Allowance (LTA)'.

This is where the size of the member's pension is not decided by the rules of the scheme. The size of the member's pension will be affected by how much money is put into the pension fund for the member, how much the pension fund has grown, and what annuity rate is available when the member retires. This system is also called a money purchase scheme.

This document shows the rules of the pension scheme and what it provides in detail.

A person is financially dependent on a member or pensioner or was so at the time of death or retirement of the member or pension. Scheme rules may define a dependant differently.

For HMRC purposes, a spouse qualifies automaticaly as a dependant and a child of the member or pensioner may always be regarded as a dependant until attaining the age of 18 or ceasing to receive full-time educational or vocational training, if later.

This is a general word used to describe special financial instruments such as options and futures contracts. Financial instruments are agreements to buy or sell something, under terms laid out in a contract.

The method of investment for a self administered scheme by which the securities are held directly by or on behalf of the trustees and do not involve any form of insurance contract.

A benefit paid to an employee who is uanble to work for medical reasons.

A requirement introduced by PSA93 (formerly SSPA75) and strengthened by PA95 for pension schemes to disclose information about the scheme and benefits to interested parties.

Financial Services Authority (FSA) rules introduced for financial organisations and insurance companies to disclose product and commission information to the purchasers of life assurance and insured pension products.

Regulations requiring disclosure of information about pension schemes and benefits to interested parties.

The main regulations are the Occupational Pension Schemes (Disclosure of Information) Regulations 2013.

This is a person who stops being an active member of a pension scheme but who does not start to get a pension straightaway.

The retirement of a member with immediate retirement benefit before normal pension date. The benefit may be reduced because of early payment. See also ill-health early retirement.

An order of the Court, made under amendments introduced by PA95, when a member of an occupational pension scheme or personal pension scheme divorces, directing the trustees or managers to pay some or all of the member's benefits to the ex spouse at the time they become payable to the member. See also pension splitting.

See lower earnings limit and upper earnings limit.

The conditions which must be met for a person to be a member of a scheme or to receive a particular benefit. These may, for example, relate to age, service, status and type of employment.

An Industrial Training Board, or a successor body to an Industrial Training Board that participates in and sponsors the Scheme.

Scheme trustees are now being required to monitor the financial strength of sponsoring employers and their individual ability to meet their ongoing contribution obligations to their pension schemes is one of the main requirements of The Pensions Regulator (the UK regulator of work-based pension schemes, whose top priority is to tackle risks to members’ benefits in UK pension schemes). This, amongst other things, involves scheme trustees considering scheme participating employers’ credit worthiness and their risk of insolvency, which trustees are expected to do with our specialist advisers in this area of financial analysis. 

One of two forms of transitional protection (the other is 'Primary Protection') for registering pre 'A-Day' rights. Broadly it permits the value of registered pension rights to be indexed in line with pay (or 5% pa or RPI if greater), or if Defined Contribution, in line with investment returns. The Lifetime Allowance charge does not then apply.

A prospective benefits valuation method in which the new entrant contributions rate is taken as the standard contribution rate.

The date on which an employee is permitted to join, or actually joins a pension scheme.

The risk taking part of a company's assets and is usually known as ordinary shares.

A means by which a member can indicate a preference as to who should receive any lump sum death benefit. The choice is not binding on the Trustees and as a result inheritance tax is normally avoided (see also "Nomination Form").

This is another name for a final salary scheme.

Is the salary on which your benefits are calculated. It is:

your average Pensionable Salary in 6 consecutive years ending on Normal Retirement Date, or date of exit if earlier.

(Where Pensionable Service is less than 6 consecutive years then Final Pensionable Salary will be the average of your Pensionable Salary over your actual period of service).

Is the salary on which your benefits are calculated. It is the better of:

- average Pensionable Salary in 3 consecutive years ending on Normal Retirement
Date, or date of exit if earlier, and

- average Pensionable Salary over any period of 3 consecutive years during the last 10 years service. (Where Pensionable Service is less than 3 consecutive years then Final Pensionable Salary will be the average of your Pensionable Salary over your actual period of service).

Is the salary on which your benefits are calculated. It is the better of:

- average Pensionable Salary in any one of the 5 years ending on Normal Retirement
Date, or date of exit if earlier, and

- average Pensionable Salary over any period of 3 consecutive years during the last 10 years service

This is the most common type of defined benefit scheme. It means that the pension paid to the member is based on how much they are earning when they retire. This amount could be an average over their last few years of work. The ITB Pension Funds is a final salary scheme.

The Financial Ombudsman Service can investigate a complaint about the selling or marketing of a pension scheme when a consumer is not satisfied with the way the firm has handled the complaint. 

Since 1 December 2001, it is the statutory regulator of financial services in the UK replacing the functions of previous regulatory bodies such as the Securities and Investment Board.

The FSA is the independent watchdog set up by government to regulate financial services in the UK and protect the rights of retail customers. By law, most financial services firms, including providers of personal and stakeholder pensions, must be authorised by the FSA. You can check that the firm you are dealing with is authorised by using the FSA Firm Check Service on their website or via the consumer helpline. 

The FSA also regulates the selling and marketing of personal and stakeholder pensions. (The Pensions Regulator regulates the administration of pension schemes but not the selling of pensions.)

The FSA provides general information about personal or stakeholder pensions. But it cannot give you advice specific to your circumstances. The FSA does not investigate individual consumer complaints but has a complaints process that firms must follow. The firm will advise you of this.

FSCS is the UK's statutory fund of last resort for customers of authorised financial services firms. Authorised firms are those that are regulated by the Financial Services Authority (FSA). FSCS may be able to pay compensation if a firm is unable, or likely to be unable, to pay claims against it. 

For pensions this may be, for example, where a consumer has a complaint about the selling or marketing of a personal pension, and the firm has gone out of business and is unable to pay claims against it, or where a pension provider goes out of business and is unable to meet its commitments to policyholders. 

Loans issued by a company. The Government (Gilt or Gilt Edged) or local authority, where the amount of interest to be paid each year is set on issue. Usually the date of repayment is also included in the title.

This is the first time a company goes public and issues its shares for purchase.

That part of an employees earnings which is not paid on a fixed basis but is additional to the basic wage or salary. It may include profit related pay, bonuses and benefits in kind.

If you are an active member having accrued 40 years' Pensionable Service the following additional benefits will apply:
you will not be required to make further contributions to the Scheme, and neither will your Employer on your behalf

and

your National Insurance contributions will remain at the contracted-out rate, and so
will those of your Employer

and

if you have by then reached age 60, your pension will be worked out in the same way as it would be at Normal Retirement Date (as described in the Open Fund - Old Section Member Booklet) but based on your Final Pensionable Salary and Pensionable Service at retirement

or

if you are over age 55 but under age 60 your pension is worked out in the same way as it would be for Early Retirement (as described in the Open Fund - Old Section Member Booklet) but the reduction for early retirement would only apply from age 60, or such later date as you may attain 40 years' Pensionable Service before Normal Retirement Date.

If you are a deferred member you will also be eligible for special provisions if:
you would have achieved 40 years' Pensionable Service in the Scheme before
Normal Retirement Date

and

had 2 years' Qualifying Service at date of leaving (5 years for leavers prior to 6th
April 1988),

then your pension would be payable from age 60, or from the date you would have achieved 40 years' Pensionable Service if that is later.

If you opt for early retirement the reduction will only apply from your retirement date under the special provisions.

These are the benefits a member has already earned from a scheme when they stop being an active member (or the scheme closes). The member will get these benefits when they retire. These are also called preserved benefits.

Free-Standing AVCs. This is a similar arrangement to AVCs above, but FSAVCs are not sponsored by the Scheme and it is one which an individual arranges with a provider of their choice.

The Full-time Hours as specified in an employees contract of employment (details are available from your personnel department).

This is setting assets aside (saving up) so that money is available to pay future liabilities.

This is a comparison of a scheme's assets and liabilities.

The timing of payments of contributions with the aim of meeting the cost of a given set of benefits under a defined benefit scheme. Possible objectives of a funding plan might be that, if the actuarial assumptions are borne out: (a) a specified funding level should be reached by a given date; and (b) the level of contributions should remain constant, or should after a planned period be the standard contribution rate required by the valuation method used in the actuarial valuation.

This name is sometimes used to describe the recommended contribution rate. This is how much the actuary says the standard contribution rate should be to make sure the scheme has enough money to pay the necessary benefits.

The ratio of the actuarial value of assets to the actuarial liability.

This is an investment contract to buy goods at a fixed price on a particular date in the future. Both the buyer and the seller must follow the contract by law.

Guaranteed Minimum Pension. This is the underlying minimum pension which the Scheme must provide. It is broadly equivalent to the value of the S2P pension (formerly SERPS) benefit you would otherwise accrue if you were not a Member of the Scheme. GMPs ceased to accrue from April 1997 and were replaced by a minimum benefit test which the ITB Pension Funds surpasses.

This was an additional State pension which was building up before 5 April 1975.

Is the process of protecting an existing investment position or commitment using one type of investment (e.g. future or option) to cover adverse market movements.

Stock in a technology sector, such as software, semiconductors, networking or biotechnology.

In excess of basic rate tax; currently the rate is 40%.

This is the part of HM Revenue and Customs (formerly the Inland Revenue) that decides whether a pension scheme can be a Registered Pension Scheme. It has previously been known as IR SPSS and the Pension Schemes Office (PSO).

Used to describe the amount of shares an investor owns.

Protection of entitlement to the State Basic Pension for people unable to undertake regular employment because they are caring for children or a sick or disabled person at home.

Often refers to an unsolicited and unwanted bid by the target company. It rejects this bid and indicates that the company does not want to be acquired by that bidder.

Retirement on medical grounds before normal pension date. The benefit may exceed that payable on early retirement in other circumstances.

The pension a member/deferred member could apply for if they were unable to continue working on the grounds of ill-health/disability.

This is a qualified person or firm that can give people independent advice on how they could save with life assurance and pensions. An independent financial adviser is not tied to a particular company.

A Government Loan Stock or Bond, the interest and capital of which changes in line with the Retail Price Index.

This is when a pension scheme uses price rises for indexation. It means that the pension a member gets will not be worth less if prices have gone up.

A dividend declared part way through a company's financial year.

Occupational pension schemes (subject to exceptions) are required by s50 PA95 to have a procedure to deal with disputes between trustees and members and beneficiaries.

The process by which contributions and net income are used to increase the value of the assets of a pension fund by means of cash deposits, the purchase and sale of equities, fixed interest stocks, bonds, property and other assets as authorised by the trust deed or by law.

The income derived from the investment of assets.

The document agreed between an investment manager and the trustees of a scheme setting out the basis upon which the manager will manage a portfolio of investments for the trustees.

An individual or body to which the investment of the whole or part of the assets is delegated by the trustees in accordance with the provisions of the scheme documentation.

The comparison of the rate of return of a given pension fund and/or its constituent parts over a period with one or more of: (a) the notional return of a model fund; (b) the actual rates of return of other funds; or (b) the movement in stock market indices over the same period.

The periodic decisions regarding the types and proportions of assets in which a pension fund is invested.

Life assurance policy option with insurance provided. A policy is taken out by two (or more) individuals, the pay-out coming with either the first or final death.

One will covering both husband and wife.

A compulsory document giving key information to prospective buyers of most life and pension investments, required by the regulator, the FSA.

An employee who became a member on or after 1 October 2004 and who did not join the Scheme within the first 3 months of becoming eligible.

The retirement of a member, with immediate retirement benefit, after normal pension date.

The Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL) . These amounts are determined by the Government each year with effect from 6 April for the purpose of National Insurance contributions and the calculation of certain benefits including the State Pension.

This is how much the actuarial valuation says a scheme's assets are worth compared to its liabilities. It is usually a percentage figure, meaning that a scheme with a 100 per cent level of funding would have assets and liabilities worth the same amount.

These are amounts which the pension scheme will have to pay now or at some time in the future. The most common liability is paying members' pensions.

A rule in an occupational pension scheme under which an employer may recover from the scheme any money due to it through criminal, fraudulent or negligent act or omission by the employee.

A scheme which provides a benefit only on the death of a member (normally on death in service).

Please see LTA

A charge applied to benefits taken that are valued in excess of the Lifetime Allowance at a 'Benefit Crystallisation Event'. The charge is paid as a one off payment at 55% of the excess.

Stock bearing a fixed rate of interest. Unlike a debenture loans may be unsecured.

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The Lifetime Allowance (LTA) is an overall ceiling on the amount of tax privileged pension savings that any one individual can draw. The exact figure will be whatever the 'Standard Lifetime Allowance' for the tax year concerned is, or a multiple of this figure where certain circumstances apply (e.g. 'Primary Protection').

Essentially, it is the amount against which the total of all your pensions and cash lump sums are compared when you start to draw your pension benefits. If your total benefits exceed the LTA, you will become liable for tax on the excess over the allowance.  NOTE: CHarge to be removed from 6 April 2023.

The LTA is set at £1,073,100m for the 2023/24 tax year. (see also 'Standard Lifetime Allowance' for the current amount of LTA and those announced by HMRC).

In reality comparatively few people will have pensions close to the LTA, as can be seen by the way in which benefits are valued for this purpose:

Pensions commencing after 5 April 2006 - 20 x Annual Pension

Lump sums and money purchase funds - Full value of fund

Pensions in payment before 6 April 2006 - 25 x Annual Pension *

*The higher factor is because it is assumed that, in most cases, a tax-free lump sum will have been taken.

To illustrate this, if you are not yet drawing a pension, but have current pension benefits from your pension arrangements that total £75,000 a year or more,(eg £75,000 x 20 = £1.5 million ie 100% of the LTA), you will potentially be caught by the LTA when you come to retire, and will be subject to the additional tax charge (currently 55% on the excess).

The benefits referred to above are normally converted to a percentage of the LTA applicable at the time of payment.

If you think that you are in danger of exceeding the LTA you should contact your current pension provider for further guidance.

Note for those who were Pensioners at the 5 April 2006 - You will not be affected by these changes unless you have other pensions not in payment by 5 April 2006; or you receive a large pension increase (higher than 5% or RPI), and one or both of these would take you over the LTA.

This is the price an asset should fetch if it is sold on the open market.

A person who has been admitted to membership of the ITB Pension Funds and is entitled to benefit under the Scheme.

The MFR was replaced by the 'Statutory Funding Objective (SFO)' on 6 April 2006.

Official record of a corporate meeting.

This is when a member's benefits are based on the contributions paid by them and for them, and any increase in this amount from investments. In most cases, this involves using the member's share of the pension fund to buy an annuity.

This is where the size of the member's pension is worked out by the money purchase method. The size of the member's pension will be affected by how much money is put into the pension fund for the member, how much the pension fund has grown, and what annuity rate is available when the member retires. This is also called a defined contribution scheme.

Actuarial tables used in the insurance industry to predict the life expectancy and the death rates for various types of people.

This is the money that the Government takes from both workers and employers. The amount depends on how much the worker earns. Some Government benefits, such as the basic state pension and the State Second Pension Scheme (S2P), formerly SERPS, depend on how much national insurance you have paid.

A Directorate within the HMRC National Insurance Contributions Office. It is responsible for ensuring that the pension rights of employees contracted out of S2P (formerly SERPS) are accurately recorded, maintained and safeguarded.

A rate of contribution estimated by a pension scheme actuary as being sufficient to provide benefits for future entrants, including any contribution required from the members.

An asset that does not have intrinsic value. One example is currency. Opposite of real asset.

If a scheme pays death benefits, this is where the member tells the trustees who should get this benefit if the member dies. The trustees do not have to follow the member's wishes. This is also called Expression of Wish or Form of Request.

Any member who joined the Scheme before 1 October 2004; or any member who joined the Scheme on or after 1 October 2004 within the first 3 months of becoming eligible (i.e. any member who is not a Late Entrant)

This is the earliest age that a member can usually take their full pension benefits. Somebody retiring before this age will usually get a lower pension, but this may not apply with ill-health early retirement.

This when employees doing a particular job usually retire. It is usually the same as the normal pension age.

Under the ITB Pension Funds it is normally the last day of the month in which you attain age 65.

There are a number of notifiable events designed to give the Pensions Regulator early warning of a possible call on the Pension Protection Fund.

 
The events fall into two groups:
· scheme-related - to be notified by trustees;

· employer-related - to be notified by employers.

Only schemes which are eligible for entry to the Pension Protection Fund, and their employers, are subject to the notifiable events duty.

 
Some of the events only have to be notified by schemes that are funded below the Pension Protection Fund buy out level or where there has been a report of a materially significant failure by the employer to make a payment in accordance with the schedule of contributions. This and other exceptions to the duty to notify are contained in directions issued by the Pensions Regulator.

If an event occurs it must be notified in writing to the Pensions Regulator as soon as reasonably practicable. Failure to notify should be reported as a breach of the law likely to be of material significance to the Pensions Regulator.

A scheme organised by an employer or on behalf of a group of employers to provide pensions and/or other benefits for or in respect of one or more employees on leaving service or on death or retirement.

The 2007 Section of the Open Fund became effective on 1 January 2007 and those Employers who have elected to provide the 2007 Section have done so at various dates since then.  If you are unsure which section of the Fund you are a member of please see the 'Your Section' page, available from the left-hand menu (providing you have logged-in).

The New Section of the Open Fund became effective on 1 September 2003 and those Employers who elected to provide the New Section have done so at various dates since then.  If you are unsure which section of the Fund you are a member of please see the 'Your Section' page, available from the left-hand menu (providing you have logged-in).

This is the original section of the Open Fund, which has been called the Old Section since the introduction of the ‘New Section’ of the Open Fund in September 2003. If you are unsure which section of the Fund you are a member of please see the 'Your Section' page, available from the left-hand menu (providing you have logged-in).

This is when an employee leaves an occupational pension scheme or chooses not to join one.

Gives the right but not the obligation to buy or sell an underlying commodity of financial instrument at a certain date in the future. Options are often favoured by smaller investors as the risk is limited to the purchase price of the option. An option is a derivative.

The application of statutory requirements to pension schemes by means of provisions which directly override scheme rules.

A preserved benefit which is fully secured for an individual member under a contract of insurance under which premiums have ceased to be payable in respect of that member.

See Paid-Up Benefit.

The Part-time Hours as specified in employees contracts of employment (for ITB Pension Funds Members, details are available from their personnel department).

An employer whose employees have the right to become members of an occupational pension scheme.

A money management strategy that seeks to match the return and risk characteristics of a market segment or index, by mirroring its composition. Also called passive portfolio strategy.

This where pension benefits are paid out of present day income. There is nothing set aside to pay future pension benefits. This is a type of unfunded scheme. The basic state pension and the State Second Pension Scheme (S2P), formerly SERPS are both pay as you go schemes, with the benefits paid from taxes.

Pay as you earn method of income tax collection.

The post 'A-Day' term for a tax free lump sum at retirement.

See earmarking.

The fraction of pensionable earnings for each year of pensionable service which forms the basis of the pension in a final salary scheme or a career average scheme.

This is the money saved and turned into assets of the pension scheme.

This is when a pension which is already being paid is increased.

The amount of pension accrual/contributions within a 'Pension Input Period'. The 'Pension Input Amount' is tested against the 'Annual Allowance' of the tax year in which the end of the 'Pension Input Period' falls.

Generally, a 12 month period (not necessarily the tax year), although can be shorter, over which the 'Pension Input Amount' is measured. The 'Pension Input Amount' is tested against the 'Annual Allowance' of the tax year in which the end of the 'Pension Input Period' falls.

The Pension Protection Fund is a statutory fund run by the Board of the Pension Protection Fund, a statutory corporation established under the provisions of the Pensions Act 2004. It began work on 6 April 2005.

It is designed to protect scheme members from the loss of their pension rights in the event that a sponsoring employer becomes unable to meet its pension obligations to its pension scheme. However, the benefits available from the PPF have certain limitations applying. The PPF is funded by an annual levy which it imposes on all pension schemes, part of which is on a risk based assessment and is important because an employer’s high risk assessment

If you have a query about whether you may be entitled to compensation from the Pension Protection Fund you should, in the first instance, contact your pension scheme trustees.

This service is part of the Department for Work and Pensions. It manages the payment of state pensions and benefits. You should contact them if you have a query about the benefits and entitlements provided by the State.

The splitting/sharing of a member's benefits under a pension scheme between the member and the divorced spouse, either within the scheme or by means of a transfer payment. The benefits belong to the member and divorced spouse separately and each can decide when to take their benefits.

See 'Pension Sharing'.

This is a way of giving members tax relief. People in occupational pension schemes have their contributions taken out of their pay before their tax is worked out.

The Department for Work and Pensions maintains a register of pension schemes. They provide a tracing service which can help you if you have lost track of your pension scheme. For example, you might have lost touch with your scheme when you changed jobs, or if a former employer has changed its name. This could mean that you cannot claim your pensions when you retire. 

This is the age when people can start to get the basic State Pension. For periods where not in contracted-out employment the State Second Tier Pension (S2P) formerly SERPS, may also be payable.

For ITB Pension Funds Members it is the salary on which you pay contributions and is your annual rate of salary or wage, excluding overtime and any other fluctuating payments.

Years and complete days of service you complete whilst a Member of the ITB Pension Funds (Open Fund), and make contributions, plus any additional Pensionable Service arising from:

- transfers into the Scheme

- purchased by AVCs

- purchased for you by your Employer

- special service credit awards.

Pensionable service is subject to an overall maximum of 40 years.

A person who is currently receiving a pension from the Scheme.

Pensions Act declared by Parliament e.g. PA95 (Pensions Act 1995) also see Pensions Schemes Acts (PSA)

The Pensions Advisory Service provides free help and advice to people with queries about their occupational, personal or stakeholder pensions. It has a telephone helpline which is open from 9am to 5pm Monday to Friday. The service may be able to help you directly or, depending on the nature of your query, they will advise you which other organisation can help.

www.pensionsadvisoryservice.org.uk/contacting-us

Pensions Helpline: 0300 123 1047

The Pensions Cap ceased to apply from 6 April 2006. If the pensions cap restricted your pensionable salary under the ITB Pension Funds as at 5 April 2006 then the Funds’ Office would have written to you explaining how this would affect your pension benefits.

The Pensions Ombudsman deals with disputes about entitlement and complaints of maladministration from members of occupational pension schemes and personal pension schemes. The Ombudsman's role also includes investigating complaints or disputes between Trustees of occupational pensions schemes and employers, and between Trustees of different occupational pensions schemes. To contact the Ombudsman their email address is Enquiries@pensions-ombudsman.org.uk or visit the Pensions Ombudsman’s website.

On 6 April 2005 the Pensions Regulator replaced the Occupational Pensions Regulatory Authority (OPRA) as the regulator of work-based pensions in the UK. The Pensions Regulator is created under the Pensions Act 2004, which sets out a new regulatory framework for pensions. The address for the Pensions Regulator is Napier House, Trafalgar Place, Brighton BN1 4DW.

Pensions Schemes Act declared by Parliament e.g. PSA93 (Pensions Schemes Act 1993) also see PA (Pensions Act).

This was the organisation that dealt with the rules on how firms can advertise and sell financial products, such as pensions. This is now the responsibility of the 'Financial Services Authority (FSA)'.

This is someone's personal pension arrangement. It can also mean a retirement annuity set up before July 1988.

This is the agreement somebody has with a pension firm about their personal pension scheme.

This is a scheme run by a private company for one person. It can be for someone who is self-employed, or an employed person who is not in an occupational pension scheme. Somebody who is part of an occupational pension scheme that only pays death in service benefit (which means that there is no pension paid) can also join a personal pension scheme.

Pension rights accrued before 'A-Day'.

These are benefits an occupational pension scheme member has already earned from the scheme when they stop being an active member (or the scheme closes) before their normal pension age. The member will then get these preserved benefits when they retire. These are also called frozen benefits.

The current share price of a company divided by the last published earnings per share, where earnings per share is net profit divided by the number of ordinary shares. The P/E ratio is the measure of the level of confidence investors have in a company (rightly or wrongly). Generally, the higher the figure, the higher the confidence.

One of two forms of transitional protection (the other is 'Enhanced Protection') for registering pre 'A-Day' rights. When a member's rights registered at 'A-Day' exceed £1.5m, this value replaces (and grows in line with) the Standard Lifetime Allowance.

Commonly used in scheme documentation for the particular participating employer in which is vested special powers or duties in relation to such matters as the appointment of the trustees, amendments and winding up. Usually this will be the employer which established the scheme or its successor in business.

The Actuarial Liability for active members either as at the valuation date or as at the end of the Control Period is calculated taking into account all types of decrement. In such calculations pensionable pay is projected from the relevant date up to the assumed date of retirement, date of leaving service or date of death as appropriate. This method is also known as the Projected Unit Credit Method.

A valuation method in which the actuarial liability at the valuation date is the present value of: (a) the benefits for current and deferred pensioners and their dependants, allowing where appropriate for future increases; and (b) the benefits which active members will receive in respect of both past and future service, allowing for projected earnings up to their assumed exit dates and, where appropriate, for increases thereafter, less the present value of future contributions payable in respect of current members at the standard contribution rate.

An individual, not currently a member of the pension scheme of his/her employer, who is either entitled to join or will become eligible to join in  the future by virtue of continuing in employment with the employer.

The length of potential future pensionable service of a member up to a future date or age. Used by some schemes in calculating some benefits (often incapacity pensions or spouse's pensions).

Act of Parliament e.g. PSA93 (Pensions Schemes Act 1993).

An occupational pension scheme for employees of central or local government, a nationalised industry or other statutory body.

This is the system used by a transfer club made up mainly of public sector pension schemes. A transfer club is where several schemes deal with transfer payments in the same way.

This is a public sector pension scheme where the rules are set up by law, for example the Civil Service scheme.

For ITB Pension Fund Members it establishes qualification for certain benefits from the Scheme. It is your Pensionable Service plus any Qualifying Service granted on transfer into the Scheme.

Minimum number of people who must be present (physically or by proxy) in order for a decision to be binding.

The percentage change in the value of an investment over a period, taking into account both the income from it and the change in its market value.

An asset that is intrinsically valuable because of its utility, such as real estate or physical equipment. Opposite of nominal asset.

The difference between the rate of return of an investment and a selected measure of inflation over the same period. The measure of inflation used should be specified, but will often be the index of retail prices or of national average earnings.

To make something real from a transaction, such as to get the profit from an investment that has appreciated by selling it.

An overseas scheme satisfying certain conditions which is recognised by HM Revenue & Customs mainly for the purposes of transfers in and out.

A transfer payment to another registered pension scheme or recognised overseas pension scheme, in lieu of a member's accrued rights in a registered pension scheme.

Where an actuarial valuation shows the scheme to be in deficit a recovery plan must be agreed which will return the scheme to being fully funded.

This is a list of occupational pension schemes and personal schemes kept by the Pensions Regulator. It can be used so that members can find schemes they have lost touch with, and so that the Pensions Regualtor can check that every scheme has paid the levy. The list is officially the Pension Schemes Registry.

This is the post 'A-Day' equivalent of an approved pension scheme. Registration is granted by HM Revenue & Customs, either through a successful application, or by virtue of being an approved pension scheme on 5 April 2006. The ITB Pension Funds are registered under Chapter 2 of Part 4 of the Finance Act 2004.

The post 'A-Day' equivalent of approval. Registration is granted by HM Revenue & Customs, either through a successful application, or by virtue of being an approved pension scheme on 5 April 2006.

An inflationary indicator that measures the change in the cost of a fixed basket of retail goods.

The annual return on an investment, expressed as a percentage of the total amount invested. Also called rate of return. The yield of a fixed income security.

Also known as State Second Pension, this replaced the State Earnings Related Pension Scheme (SERPS) from 6 April 2002. The ITB Pension Funds scheme is designed so that people who do not earn a lot will get a pension of no less than they would have been entitled to from S2P, had they not been contracted-out under the ITB Pension Funds.

Note: Contracting-out ceased 5/4/2016

See 'Pensions Cap'.

Scheme in the context of this glossary means the ITB Pension Funds - Open Fund either the Old Section; New Section; 2007 Section; Old2New Section; Old+New+2007 Section; Old+2007 Section and New+2007 Section and the Closed Fund.

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

Nominated person(s) or corporate entity who has a number of responsibilities for a scheme, including the payment of certain tax charges.

The auditor appointed by the trustees or managers of an occupational pension scheme under s47 PA95.

The detailed provisions of a pension scheme, brought into operation by a definitive trust deed or in some other formal way, for example by a trustees' resolution.

The Pensions Act 2004 and the Scheme Funding Regulations of 2005 set out the requirements for a new funding regime for defined benefit pension schemes by introducing Scheme Specific Funding arrangements to apply to actuarial valuations of pension schemes. These are intended to encourage pension schemes to increase funding levels and requires Trustees to use prudent assumptions in deciding the scheme contribution rates and where necessary to seek additional contributions from Employers. Scheme Trustees and the Participating Employers are required to agree to key elements of the funding of schemes to ensure that there are sufficient and appropriate assets to meet the benefits accrued at the valuation date and in so doing lessen the possible risk of calls on the Pension Protection Fund in the event of an Employer’s insolvency.

The scheme-specific funding requirements replace the minimum funding requirement . Key elements of Scheme Specific Funding Requirements are:

- a requirement for scheme trustees to prepare a Statement of Funding Principles (SFP) setting out the scheme's strategy for funding its pension commitments and for correcting funding deficits. The SFP will complement the Statement of Investment Principles which trustees are already required to prepare;

- regular actuarial valuations, based on a funding approach consistent with the strategy set out in the scheme’s SFP. Trustees will determine the the actuarial methods and assumptions to be used, having obtained advice from the scheme actuary;

- more effective communication with scheme members to ensure that they are better informed about the funding of their scheme;

- powers for The Pensions Regulator to help resolve disputes about funding issues between the trustees and the sponsoring employer; and

- clarification of the scheme actuary's role in respect of scheme funding.

The financial year of an occupational pension scheme for which the audited accounts and the annual report are prepared. The scheme year for the ITB Pension Funds runs from 1 April to 31 March.

The Securities and Investments Board (SIB) was replaced by the Financial Services Authority (FSA) in 1997.

This is an occupational pension scheme where the trustees or an investment manager decide how the assets are invested. 'Self-administered' does not mean that the members run the scheme themselves.

In this type of pension scheme the member has a say in the scheme's investments. They may employ somebody to make these decisions for them.

The State Earnings Related Pension Scheme (SERPS) was replaced by the State Second Pension (S2P) on 6 April 2002.

A refund of employee contributions on leaving an occupational pension scheme.

This is a test done by the actuary. The actuary works out whether the pension scheme has enough assets to pay the pension benefits owed to its members under the scheme rules. This test may be done to check a scheme meets the Minimum Funding Requirement.

A style of investment where individual investment managers concentrate on defined asset classes.

The pension paid to a spouse (including same sex marriage) and civil partner of a deceased member.

See Self Regulating Organisation.

This is a name for a pension scheme that meets certain conditions, including the charges and the way the scheme is run. Since October 2001, most employers that do not already offer a pension scheme must choose (nominate) a stakeholder scheme. Although the employer does not have to pay into this scheme, they must allow their staff easy access to the scheme.

The contribution rate (employer and employee) appropriate to a particular funding method before taking into account any Actuarial Surplus. It is normally expressed as a percentage of pensionable pay.

The overall ceiling on the amount of tax privileged pension savings that any one individual can accumulate over the course of their lifetime without taking any special factors into account that may increase or decrease the tax-privileged ceiling. The Standard Lifetime Allowance has been set at the following level for the last few years:

- 2006/2007: £1.5m

- 2007/2008: £1.6m

- 2008/2009: £1.65m

- 2009/2010: £1.75m

- 2010/2011: £1.8m

- 2011/2012: £1.8m

- 2012/2013: £1.5m

- 2013/2014: £1.5m

- 2014/2015: £1.25m

- 2015/2016: £1.25m

- 2016/2017: £1m

- 2017/2018: £1m

- 2018/2019: £1.03m

The age people normally start getting the Basic State Pension and the benefits from the State Second Pension (S2P), formerlly SERPS. Originally it was 65 for men and 60 for women. The Women’s State Pension age will increase gradually to 65 between April 2016 and November 2018. From December 2018 the State Pension age for both men and women will start to increase to reach 66 by October 2020.  State Pension age will increase to 67 between 2034 and 2036.

Also known as State Second Pension, this replaced the State Earnings Related Pension Scheme (SERPS) from 6 April 2002. The ITB Pension Funds are scheme is designed so that people who do not earn a lot will get a pension of no less than they would have been entitled to from S2P, had they not been contracted-out under the ITB Pension Funds.

Trustees have primary responsibility for all aspects of scheme funding but in all cases they will be expected to consult with employer with a view to reaching agreement on the 'statement of funding principles', the schedule of contributions and , where applicable, to the 'recovery plan' Trustees are required to produce a Statement of Funding Principles setting out :-

 
- their approach to how the Objective will be met

 
- the methods and assumptions used to calculate the technical provisions

 
- the way in which any shortfall will be dealt with

 
The Statement must be completed within fifteen months of the first valuation date under the new regime and be reviewed within fifteen months of each subsequent valuation date. It has to be disclosed on request by a member or trade union.

In choosing assumptions trustees are expected to consider a range and to consider the effects on the schemes of the risks from variances from the assumptions chosen. They are also expected to take account of scheme-specific factors e.g the scheme's asset allocation or any evidence of scheme-specific mortality influences.

As well as calculating the funding level on the scheme-specific basis the valuation must also include an assessment of the scheme's solvency level on a buy-out basis or an alternative measure of solvency if the actuary considers buy-out is not a realistic option given the size of the scheme.

A written statement of the principles governing decisions about investment for an occupational pension scheme, which trustees are required to prepare and maintain. Trustees must have regard to advice from a suitably qualified person and consult with the employer.

This derives from the EU Occupational Retirement Provision Directive and requires schemes to have sufficient and appropriate assets to cover their technical provisions (ie liabilities). This generally requires regular valuation checks on that and the implementation of a recovery plan where funding falls short.

The Statutory Funding Objective (SFO) replaced the Minimum Funding Requirement (MFR).

The SFO requires that every scheme must have sufficient and appropriate assets to cover its 'technical provisions'. A scheme's 'technical provisions' means the amount required, on an actuarial calculation, to make provision for the scheme's liabilities.

A scheme (usually in the public sector) established by Act of Parliament

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

This is a way of giving members tax relief. People in occupational pension schemes have their contributions taken out of their pay before their tax is worked out.

An independent organisation which gives free advice to members of the public who have a problem about an occupational pension scheme or personal pension scheme. It does not give financial advice or advice on state scheme benefits. Formerly known as the Occupational Pensions Advisory Service (OPAS) when its remit was restricted to occupational pensions.

There are two tracing services. One is run by the Pension Schemes Registry to help people keep track of the pension benefits they have earned in the past. The other service is run by the DWP to help schemes keep track of their deferred pensioners.

A fund which seeks to match investment performance to a particular stock market index.

If a member changes schemes, they may get a transfer payment from their old scheme to the new one. The benefit that the member earns from this payment is called a transfer credit. This will also count towards their qualifying service in the new scheme.

This is an amount that a scheme may pay when a member leaves. This amount will either go into a new scheme that the member has joined, or will be used to purchase a buy-out policy for the member. The scheme may make this transfer payment because of the scheme's rules, or because of the member's rights under the law (a statutory transfer).

This is the amount paid as a transfer payment.

This is the amount that a Member's previous pension scheme may pay to the
Scheme to provide extra benefits.

This is the amount that the Scheme will pay when a Member leaves; it is paid to the Member's new scheme.

These are measures introduced as part of the A-Day changes to enable individuals with significant (or with the expectation of significant) pension benefits to avoid a potential recovery tax charge by registering for either Primary or Enhanced Protection.

See 'Trivial Commutation Lump Sum'.

Certain legislation requires accounts to show a true and fair view. This is generally understood as requiring accounts to contain information in sufficient quantity and quality as to satisfy the reasonable expectations of the readers. Compliance with accounting principles and standards is integral to this concept.

Under a trust, named people (called trustees) hold property on behalf of other people (called beneficiaries). The trustees can be beneficiaries.

This is a legal document used to: set up a trust; change a trust; or control a trust.

This is a person or a company appointed to carry out what the trust must do. They must follow the laws that apply to trusts.

This is a report by the trustees on certain things to do with an occupational pension scheme. It may be part of the annual report.

The ITB Pension Funds provides details of the current Trustees and the way they are nominated to members in the Trustees' Report to members and pensioners on an annual basis.

This is one of a number of codes of practice issued by the Pensions Regulator. The purpose of this code is to provide practical guidelines on what knowledge and understanding is required by trustees under the legislation, and to set out the scheme documents with which trustees are required to be conversant. 
 
This code sets out the requirement for trustees to have knowledge and understanding of those matters included in the Scope Guidance. That Scope Guidance includes all the codes of practice and guidance issued by the regulator. All codes of practice are therefore relevant. Several codes also specifically make clear that trustees are expected to have knowledge and understanding in the particular area in question

This is when a pension scheme's assets are less than its liabilities.

1. The analysis of the risk inherent in providing an insurance policy. It involves an investigation of the circumstances surrounding the subject to be insured. The policy may be written on special terms or insurance may be refused, if the risk is deemed to be higher than average.

2. Flotations of shares on the stock exchange are sometimes underwritten by financial institutions. They agree to purchase the shares, at a pre-determined price, if the shares are not all sold on the market, receiving a fee for doing so.

These are annuity rates which are the same for men and women.

These are annuity rates which are not affected by whether somebody is a man or woman, whether they are married, single, separated or divorced, or whether they have any dependants.

These are earnings between the lower earnings limit for national insurance and the upper earnings limit. People in S2P have to pay extra national insurance based on these earnings.

The Lower Earnings Limited (LEL) and Upper Earnings Limit (UEL). These amounts are determined by Government each year with effect from 6 April for the purpose of National Insurance contributions and the calculation of certain benefits including the State Pension.

This is another name for upper band earnings.

This word is sometimes used to mean an actuarial valuation. This is when an actuary checks what the pension scheme assets are worth and compares them with the scheme's liabilities. The actuary works out how much the contributions from employers and members must be so that there will be enough money in the scheme when people get their pensions. With defined benefit schemes, there must be an actuarial valuation every three years.

This is a way of showing actuarial assets and actuarial liabilities. An actuarial surplus or actuarial deficiency is listed to balance the figures.

This is the name for the way the actuary values a scheme's assets and liabilities and the estimates they make.

This is the date used for the actuarial valuation. The figures shown will be for this date.

An approach used by the actuary in an actuarial valuation.

This is a report on an actuarial valuation. It is also called an actuarial report.

An occupational pension scheme's actuary or auditor (the person who checks the accounts) must by law tell the Pensions Regulator if they believe the scheme is breaking certain rules. Other people can tell the Pensions Regulator this, but they do not legally have to do so.

A contracted out occupational pension scheme must pay at least this amount in pension benefits to the widow or widower of a member who dies. This applies for any benefits earned before 6 April 1997. It does not apply to a scheme that has contracted out under the protected rights rule.

A legally enforceable declaration directing the disposal of a decedent's property, also called testament.

This is a type of insurance policy. It means that a policyholder will get a share of any surplus in the insurance company's life insurance and pensions business.

A symbol used by newspapers to signify that a stock is trading ex-dividend, or that a bond is trading without interest, or that mutual fund recently paid a capital gain or dividend.

The annual rate of return on an investment, expressed as a percentage. For bonds and notes, it is the coupon rate dividend by the market price. For securities, it is the annual dividends divided by the purchase price; here, also called dividend yield or current yield.

A bond which pays no coupons, is sold at a deep discount to its face value, and matures at its face value.

A zero-coupon bond issued by a corporation which can be converted into that corporation's common stock at a certain price, or a zero-coupon bond issued by a municipality which can be converted into an interest-bearing bond under certain circumstances, also called split coupon bond.