Pension Glossary

You should find explanations for all of our technical language on this page.

A contribution paid by a member of an occupational pension scheme, in addition the that member' normal contribution, to secure additional benefits. The possibility of such payments was a legal requirement until 2006 and is still offered by many schemes.

Is the acquisition or gradual gathering of something. In this instance, the accumulation of funds in one's pension.

A portfolio management strategy where the manager relies on his skill to make specific investments with the goal of achieving returns over and above the benchmark and sector.

An active member is a participating member of any of the pension schemes associated with that employment and who is building up pension benefits in that scheme and from that employment.

A business professional who deals with the financial impact of risk and uncertainty. Actuaries provide assessments of financial security systems and advise on policy issues for pension funds and insurance companies. It is a requirement for defined benefit schemes to have a named actuary who is appointed by the managers or the trustees of the occupational pension scheme.

Refers to the management of a pension scheme including the payment of benefits, the collection of contributions and keeping detailed records of all transactions. An insolvent company, or a company likely to become insolvent, can enter administration. When a company goes into administration, an administrator, appointed by a court, takes over the control of the company' affairs from its directors to administer the payment of the company's debts with the objective of selling the company as a going concern.

An adviser is someone who is allowed to give financial advice to a company's pension arrangement and/or has given delegated responsibility to help manage the pension arrangement on their behalf. This could include, for example, helping the employer process their pension contributions.

Information from your pension provider setting out the benefits payable in respect of a person's membership of a pension scheme. A statement is usually provided annually during the period of employment, on retirement or in the event of a wind up.

An annuity is a guaranteed retirement income product that you can purchase from an insurance company, which will decide how you'll access your pension savings for the rest of your life. Annuities can give you the security of knowing that your income is guaranteed however long you live. However, it's a one-off decision and you can't change your mind about it once purchased.

HMRC described as approved schemes those schemes which met the requirements which entitled them to the tax privileges associated with pension funding. Approved schemes are now known as registered schemes.

Process of assessing all employees age and earnings to check whether any employees who were previously not eligible and therefore not auto enrolled (and didn't wish to opt in) have now become eligible i.e they turned 22 or are now earning above the threshold. Assessment needs to take place each payroll for employees who are not members of an employers pension scheme. For more information on assessment using Smart Pension's free to use tools, click here.

The date of the employer's declared insolvency and also the date on which the assessment of the Pension Protection Fund will start.

Assets are items such as stocks, bonds, property and bank deposits that have inherent value.

Employers have a legal duty to enrol all eligible employees into a qualifying workplace pension scheme and to make contributions towards their employees' pension. The employee cannot be required to take any action to become an active member of the pension scheme. An employee who has been enrolled automatically is entitled to choose to opt out and to get a refund of the contributions they have paid.

Re-enrolment (or automatic re-enrolment) is a cyclical process that happens every three years (approximately three years after your automatic enrolment staging date/duties start date) whereby an employer must re-enrol certain eligible employees back into an automatic enrolment pension scheme. Also known as re-enrolment.

Form BR19 is used to request a Retirement Pension Forecast from the Pensions Service. Alternatively you can go online and check your state pension forecast here.

Banded earnings relate to contributions made to a banded earnings pension scheme and are earnings between the lower earnings threshold which currently sits at £6,240.00, (for the tax year 2021-2022), but below the upper limit earnings threshold, which is currently £50,270.00. Earnings between these two amounts are eligible for the minimum percentage contributions as stipulated by auto enrolment. Banded earnings will also include overtime and bonuses, not just basic pay.   For more information on this and how it relates to employee classifications and qualifying earnings, visit this page.

The flat rate state pension payable to men and women who fulfil the National Insurance (NI) contribution requirements. The basic state pension is also paid to spouses, subject to certain conditions, and to widows/widowers. The basic state pension is not earnings related.

A standard that can be used to measure an investment and put its performance in context; with the choice of a series of appropriate indices, it forms an objective test of the effectiveness of an investment strategy. It is usual to set a target which requires the performance of the fund manager to outperform the benchmark by an agreed percentage.

A member of a pension scheme, or a dependant who is entitled to receive money or other benefit from the scheme following the death of the member.

All payments made to a beneficiary including pension payments, tax-free lump sums and death benefits.

The Pensions Regulator' codes of practice give practical guidelines on how trustees can comply with the legal requirements of the regulation of pensions.

The management of conflicts of interest is key to good scheme governance. A conflict may arise in various circumstances, for example: A finance director who is also a trustee; there is a possible conflict of interest with the position of employee and that of being a trustee. A professional who is acting for both an employer and the trustees; there is a possible conflict of interest in such a situation.

A phrase commonly used to describe a pension scheme which is not contracted out of the State Second Pension (S2P, previously known as SERPS). That is a scheme where the members continue to be entitled to S2P.

A phrase commonly used to describe a pension scheme which provides benefits in the place of the State Second Pension (S2P, previously known as SERPS). A rebate of the relevant National Insurance contributions currently pays for these benefits from the scheme.

A period of time during which the normal employer contributions are temporarily not being paid into a pension; this is usually when the fund is in surplus. Very unusually, members' regular contributions may also be suspended.

A contributory scheme is one which requires contributions to be made by active members.

A corporate trustee is a company whose role is to act in the interests of investors by being an independent supervisor of security and a custodian of assets.

A financial institution set up as a corporate trustee being independent of the investment management function and having responsibility to hold and safeguard the scheme's assets for each individual member. Independent custodians may collect income and also provide other financial services where required.

The holding and safeguarding of a scheme's assets along with the maintenance of accurate records of ownership and the financial management of the securities.

A defined benefit pension scheme - sometimes called a final salary pension scheme - is one in which the benefits are defined in the scheme rules and accrue independently of the contributions payable and the investment returns. The benefits on retirement are determined by rules set out by the scheme and are, most usually, related to members' earnings when retiring or leaving the scheme and the length of pensionable service.

With a defined contribution pension – also known as a 'money purchase' scheme - a member's benefits are determined by the value of the pension fund at retirement. A pension pot is built up using the contributions paid into it, in respect of that member, plus any investment returns and tax relief.

When a member of a pension scheme dies while still employed by the sponsoring employer, it is known as 'death in service'. Death in service is usually provided by your employer as part of a benefits package and pays a lump sum to dependants.

All employers are required to submit a declaration of compliance with the Pensions Regulator. This declaration tells the Pensions Regulator what has been done to comply with their automatic enrolment duties. The duty to complete a declaration of compliance rests with the employer but they are able to authorise someone else to do this on their behalf. Employers have five months from their staging date to complete their declaration of compliance. For more on declaration of compliance, click here. To see our video on how to submit your declaration of compliance, click here.

Is the process of turning your pension savings into retirement income when you have reached retirement age or come to the end of your working life.

A deed to be used for appointing one or more new trustees to an occupational pension scheme.

A member who has left service or opted out and is currently entitled to a deferred pension in an occupational pension scheme. Deferred members are also known as early leavers.

The deficit is the amount by which a scheme's liabilities exceed its assets.

Someone who is financially dependent upon the member or pensioner, or was so at the time of retirement or death of the member or pensioner. The rules of a scheme will define the term dependant precisely.

The purpose of disclosure is to make available the information, which trustees must provide, about a scheme and the benefits for members. Some of this information must be given automatically and more extensive disclosure than standard disclosure must be provided on request.

Every new employer that hires staff for the first time on or after 1st October 2017 will have a date when their new automatic enrolment duties come into force; this is known as the employer's duties start date and is the date that their first employee starts work. For more information on your duties start date, click here. To find out what an employer needs to do by their duties start date and thereafter, our employer's automatic enrolment duties checklist can be accessed here.

A Defined Contribution scheme in which all benefits are secured by an insurance policy. Each member accumulates an earmarked (individual) pension under the policy.

When a member of a pension scheme divorces, a court order will require that the trustees pay some or all of the member's benefits to the ex-spouse, or ex-civil partner, at the time that these benefits would have been liable to be paid to the member.

For an employee to be eligible for auto enrolment they must be:  Aged between 22 years and state pension age. Ordinarily working in the UK under their contract of employment.  Has qualifying earnings payable by the employer in the relevant pay reference period that are above the earnings trigger for auto enrolment. Current tax year 2021-2022 is £10,000.00 per annum.    For more details on employee classifications, click here.

An entitled worker is someone who does not have qualifying earnings to fit the jobholder description but is entitled to join a workplace pension scheme, usually without employer contribution if they choose, though an employer can choose to make contributions if they wish, it is entirely at their discretion for 'entitled' workers. The following requirements must be met to be considered an entitled worker:   Work in the UK. Aged between 16 and 74.  Earn less than the qualifying lower earnings threshold (less than £6,240.00 annually, £520.00 monthly, or £120.00 weekly for the 2021-2022 tax year).    For more details on employee classifications, click here.

The stock of a company is partitioned into shares, the total of which are stated at the time of the formation of the business. Shares in a company are traded on a stock exchange. Shares represent a fraction of ownership of a company and owning shares in a company usually entitles shareholders to a share of the profits, if any, which are then paid as dividends.

An expression of wishes is a means by which a member of a pension scheme can indicate to the trustees a preference as to the recipient of any lump sum death benefit.

The Financial Times publishes various indices which show the movement of the share prices of the companies which are included in a particular index. The best known index is the FTSE 100 (known informally as the "Footsie") which is an index composed of the 100 largest companies listed on the London Stock Exchange (LSE). These are often referred to as 'blue chip' companies, and the index is seen traditionally as a good indication of the performance of major companies listed in the UK. There are many other FTSE indices including the FTSE all-share index which includes all shares currently listed on the LSE.

Please refer to DB scheme

The Financial Services Authority split into two regulatory bodies on 1 April 2013; these are the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The role of the FCA is to regulate the standards of conduct of financial firms providing services to consumers and maintains the integrity of the UK's financial markets. The FCA also has responsibility for the prudential regulation of those firms that are not regulated by the PRA.

All financial advisers are authorised and regulated by the Financial Conduct Authority (FCA). They advise individual members about the investment options that are most suitable for their personal situation and how their investments should be best organised. They also advise the trustees of small pension schemes during the set-up of such schemes.

A fixed interest is a term covering all investments where the interest is fixed at a pre-agreed rate for a fixed term and includes gilts, corporate bonds and index-linked gilts.

A company, or an individual, to whom the trustees of a scheme delegate the management of all, or a part of, the scheme's assets. Fund managers are also known as investment managers.

The actuarial value of a scheme's assets compared to the scheme's liabilities at a specified date, which is usually the valuation date. The relationship is usually expressed as a percentage.

The absolute amount of any liabilities or assets.

The minimum pension which a United Kingdom pension scheme has to provide for those employees who were contracted out of the SERPS for service before 6 April 1997 (unless it was a DC scheme contracted out through the provision of protected rights). The amount is said to be 'broadly equivalent' to the amount the member would have received had they not been contracted out.

Gilt-edged securities, known as gilts, are bonds issued by the UK Government which have a fixed interest rate. They may be index-linked which means the value of the gilts increases with inflation resulting in an increase in the amount of interest paid.

Group personal pensions are personal pensions that are linked to an employer. An employer can establish a group personal pension scheme as a way of providing all employees with access to a pension plan run by a single provider. Although each member has a separate pension policy, contributions are collected by the employer who pays them to the provider. There is no board of trustees and, because of the contractual arrangements, a GPP scheme is referred to as a contract-based scheme rather than a trust-based scheme.

HMRC was formed in April 2005 by the merger of the Inland Revenue and Her Majesty's Customs and Excise Departments. It is HMRC that determines the tax environment within which pensions schemes operate and assists in the understanding of the tax rules on pension schemes and their management.

IDRP is a formal complaint procedure which all occupational pension schemes are required to put in place; the written procedure deals with disputes between trustees and beneficiaries.

Independent Financial Advisers, or IFAs, are those professionals who offer independent advice on matters of the financial nature and work with their clients to recommend the most appropriate financial products available on the market for them.

A means for the withdrawal of retirement income from an approved money purchase pension scheme as 'drawdown income' while leaving the rest of the fund invested in order to defer the purchase of an annuity. This is now largely replaced by unsecured pension arrangements that were introduced by tax changes that took effect from April 2006.

An independent trustee can be a useful adjunct to many trustee boards as the demands on lay trustees increase. It may be an individual, or company, who performs the duties of a trustee but provides an independent source of opinion where other board members might have conflicts of interest to manage. When an insolvency practitioner has been appointed to an employer, the regulator may appoint an independent trustee to monitor the company's occupational pension scheme.

The UK was one of the earliest economies to issue inflation-indexed bonds with the first index-linked gilt being issued in 1981. The value of index-linked gilts, also known as inflation-linked gilts, increases each year with inflation (in line with the General Index of Retail Prices, also known as the RPI) which results in an increase in the amount of interest paid.

Indices show the average movement of the value of a compilation of assets and pension funds often use indices as benchmarks. There are different indices which apply to different types of asset, for example property, gilts, corporate bonds and shares in companies. Overseas assets have their own indices, for example the Nasdaq and Dow Jones in the USA and the Nikkei in Japan.

Offers made by an employer to encourage (induce) members to transfer out of a scheme. Such inducements usually take the form of a cash payment but may also be a one-off contribution to another pension arrangement.

Please refer to index-linked gilts.

An adviser who helps trustees with their long-term investment planning usually after the scheme actuary has worked with the trustees on the division of assets between fixed interest and more volatile investments. An investment consultant may also advise the trustees on appropriate fund managers for the assets in question.

A document of agreement between the trustees of a scheme and a fund manager laying out the basis upon which the fund manager will manage a portfolio of investments for the trustees.

A collection of assets that is owned by a person or organisation which is frequently diversified so as to diminish the risk inherent in investments in certain markets.

A benchmark for short-term interest rates that some of the world's leading banks charge each other for short-term loans. The rate is published daily.

A method of providing capped annual increases for members of a pension scheme where they relate to service after 5 April 1997.   LPI is usually the lesser of the annual increase in the Retail Prices Index and either 5% or 2.5%.

A strategy used mainly in defined contribution schemes whereby the allocation of a member's assets is adjusted depending on their age and time until retirement. Assets are usually gradually moved from equities to bonds and cash as the date of retirement approaches.

A lump sum is a single payment of a sum of money, as opposed to a series of payments made over time, that members can choose to take on retirement; such payments are currently free of tax. If a lump sum is paid then the member's pension is reduced accordingly.

A person who is a member of a pension scheme and is thus entitled to benefits under than scheme. The term member is sometimes used to refer only to an active member of a scheme. For more on active members, see our Members' Guide.

Ordinarily, in a normal tax year you are able to contribute £40,000, receiving tax relief on this amount. If you've accessed pension benefits flexibly, the the total amount of pension contributions that you can make in the same year, is £4,000. Previously, this was £10,000 - but as of 6 April 2017, the government made the decision to reduce this amount to £4,000.

Money purchase schemes, also known as defined contribution pension schemes, can be schemes that are set up by your employer as a workplace pension or a private one arranged by an individual. Payments made into money purchase schemes are then put into investments by the pension provider, which is designed to yield benefits upon retirement based on how the investment performs.

A pension scheme which does not require contributions from its active members. You can find out more information here.

A non-eligible jobholder is someone who is not eligible for automatic enrolment but has the choice to opt-in to a workplace pension scheme with employer contribution. The following requirements must be met to be considered a non-eligible jobholder: Work in the UK. Aged between 16 and 74.  Earn less than the amount required to be eligible for automatic enrolment but more than the lower earnings threshold (more than £6,240.00 annually, £520.00 monthly, or £120.00 weekly but less than £10,000.00 annually for 2021-2022).   OR  Work in the UK. Aged between 16 and 21 OR aged between State Pension Age and 74.  Earn the minimum amount eligible for automatic enrolment (more than £10,000.00 annually, monthly, or weekly for 2021-2022 tax year).  For more details on employee classifications, click here.

Where a non-eligible employee or entitled employee decide to join a pension scheme. For more information on opting in, click here.

The process by which the employee terminates their membership of the employer pension scheme and can only happen once they have been enrolled into the pension scheme and NOT before. For more information on opting out, click here or here.

PAYE stands for Pay As You Earn and is a HM Revenue and Customs' (HMRC) system that collects both Income Tax and National Insurance from employment. Employers who operate a PAYE system will receive a letter notifying them of auto enrolment and how it will affect them. This letter will include their PAYE reference number (as seen here) along with their staging date.

Please refer to Pension Protection Fund.

A statutory fund, established with effect from 6 April 2005 by the Pensions Act 2004. The PPF pays compensation at a prescribed level to members of defined-benefit (DB) schemes that are eligible for entry. A scheme may be eligible if its sponsoring employer has experienced an insolvency event and the scheme is underfunded to a specified level. The PPF is funded by a levy on all eligible defined-benefit schemes.

An employer who contributes, or has contributed, to a multi-employer or industry-wide occupational pension scheme and has been admitted to participate under the scheme's rules. Unless a scheme is winding up, participating employers must pay contributions to the scheme, as required by the scheme' governing trust deed.

A financial strategy in which a fund manager invests in accordance with a pre-determined strategy that requires no forecasting. The most popular method is to mimic the performance of an externally specified index, e.g the FTSE100, with the result that the assets move exactly in line with the chosen index.

Pension transfers are the movement of pension assets from one pension scheme to another. A member may want to transfer the benefits they have accrued from their pension, upon leaving their current employer, to the scheme of a new employer. To find out more about pension transfers and what Smart Pension can offer, visit our pension transfers page.

Any person who is currently receiving a pension from a pension scheme.

The Pensions Regulator has responsibility for all work-based pension schemes in the UK. The Regulator may investigate schemes, issue improvement notices and take action to recover unpaid employer contributions. It aims to give better protection to members of work-based schemes.

An independent body that was set up to hear appeals (references) on rulings (determinations) that were made by the Determinations Panel. The tribunal issues guidance on the content and form of an appeal and may consider any evidence available in relation to the subject to the appeal, including evidence that was not available at the time of the original determination.

Refers to the day-to-day running of the pension scheme including: the collection and allocation of contributions, the calculation of the benefits owed to members on retirement, on death or ill-health or in deferment. Accurate and up-to-date member records are to be kept and operational risks are to be managed. Administration of pension schemes may be performed internally by employees of the sponsoring employer, contracted out to a third party administration or may be carried out by the pension provider, in the case of fully insured pension schemes.

Please refer to pensions administration.

Pensions that are currently being paid.

Also known as pooled arrangement. A fund in which many investors hold units as part of a pooled investment. The assets of this pooled fund are managed by a fund manager and are not directly owned by the investors.

If an employee wishes to opt in and join the pension scheme during postponement, the employer must enrol them immediately irrespective of postponement. For more information on postponement, click here. For a step by step guide on how to postpone your staging date on the Smart Pension platform, watch this video.

The Financial Services Authority was split, on 1 April 2013, into two regulatory bodies – the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The PRA is a subsidiary of the Bank of England. The PRA is the UK regulator, in conjunction with the FCA, responsible for the prudential regulation of systemically important financial institutions, including banks, building societies, credit unions, certain designated investment firms and insurers.

One of two consumer price indices used as the domestic measure of inflation in the UK, the RPI is published by the Office for National Statistics. It measures the average change from month to month in the prices of goods and services purchased by most households in the UK. The government uses the RPI for the uprating of pensions, state benefits, tax allowances and index-linked gilts and increases in private pensions in payment are usually dependent on the rate of change of the RPI.

Re-enrolment (or automatic re-enrolment) is a cyclical process that happens every three years (approximately three years after your automatic enrolment staging date/duties start date) whereby an employer must re-enrol certain eligible employees back into an automatic enrolment pension scheme. For more information and a step-by-step guide to automatic re-enrolment, click here.

The difference between the rate of return on an investment and a selected measure of inflation (such as the RPI, which is published by the Office for National Statistics) over the same period.

The rebalancing of investments is the action of bringing a portfolio, that has deviated away from the target of the investment strategy, back into line.

An occupational pension scheme or personal pension scheme that is registered with HM Revenue & Customs under the Finance Act 2004. A registered scheme must comply with statutory provisions relating to the amounts of contributions and benefits that can be paid without incurring a tax charge. Registered schemes were previously known as approved schemes.

Scheme specific information required by The Pensions Regulator and held on the register of all occupational pension schemes.

Returns are the amounts by which an investor benefits from owning an asset – interest, dividends and any increase in value less any charges.

A top-up state pension that replaced the State Earnings Related Pension Scheme (SERPS) from 6 April 2002. S2P is an additional state pension based on an employee' National Insurance contributions and earnings.

The trustees of an occupational pension scheme must put in place and maintain a statement of investment principles (SIP). This must set out the basis on which the trustees plan to invest the scheme assets. The scheme' sponsoring employer has a right to be consulted on the contents of the SIP, and any revisions the trustees periodically make, but may not dictate the scheme' investment policy.

The main factors determining whether a company is an SME are the number of employees and either turnover or balance sheet total. In the UK, sections 382 and 465 of the Companies Act 2006 define an SME for the purpose of accounting requirements. This indicates that a small company is one having no more than 50 employees, an annual turnover of no more than £6.5 million and a balance sheet total of no more than £3.26 million. A medium-sized company is defined as having no more than 250 employees, an annual turnover of no more than £25.9 million and a balance sheet total of no more than £12.9 million.

We are required to issue annual statements to our members, these include a projection of the fund value at retirement age based on a number of factors. This is known as a SMPI calculation.

Investments that accord with the ethical, social and environmental principles adopted by the trustees. Occupational pension schemes are obliged to disclose the extent, if any, to which ethical, social or environmental considerations are considered in the selection and retention of investments.

A written agreement between employee and employer where the employee agrees to forgo part of their future earnings in return for a corresponding contribution to a pension scheme by the employer on the employee's behalf. This is different from an AVC where the contributions are paid directly by the employee.

Please refer to external auditor.

A legal adviser to the pension scheme who advises trustee boards on details of trust and pension law and their own scheme's required trust deeds and rules.

A small pot commutation is the conversion of an entire ‘small’ pension pot, that’s worth £10K or less, into a cash lump sum. A maximum number of three payments (of up to £10,000 each) for non-occupational pension schemes can be taken and an unlimited number of payments can be taken for occupational pension schemes. Each payment is 25% tax-free whilst the remaining is taxed as income. This is separate from 'trivial commutation' (see definition).

The sponsoring employer is the employer who is responsible for meeting the liabilities of a DB pension scheme. In DC schemes, it is typically the employer who sets up and/or assumes the responsibility for the running of the scheme and meeting the expenses who is the sponsoring employer.

Every employer will have a date when the new automatic enrolment duties come into force for their business; this is the employer's staging date. The staging date is determined by the number of persons in the largest PAYE scheme used by the business, based on the data from HM Revenue and Customs held by The Pensions Regulator on 1 April 2012. The more people in the in the PAYE scheme on 1 April 2012, the earlier the staging date. Your staging date will also be printed on the letter you would have received from The Pension Regulator to notify you of the impending changes of auto enrolment. For more information on staging dates or to find out when your staging date is, click here.

The Pensions Advisory Service (TPAS) is part of the Money and Pensions Service, and provides free information and guidance to help you make informed decisions about your pensions (both occupational and personal) and retirement plans. TPAS also used to manage pension complaints, but the dispute resolution function has now moved over to The Pensions Ombudsman. See The Pensions Ombudsman (TPO) definition.

A specific absolute return agreed between the fund manager and the trustees.

A lump sum is a single sum of money paid to pension scheme members at retirement in exchange for a reduction in pension payments. Such payments are currently free of tax.

The Pensions Ombudsman investigates and decides complaints and disputes about the way that pension schemes are run. Funded by registration levies on all occupational pension schemes, the Ombudsman will rule on any grievances or injustice as a result of maladministration. The Ombudsman's decision is final and binding on all the parties to the complaint or dispute. It can be enforced in the courts. His decision can only be changed by appealing to the appropriate court on a point of law.  The Pensions Ombudsman deals with:   disputes from individual members of occupational pension schemes about entitlement and complaints of maladministration  disputes between employers and trustees of occupational pension schemes disputes between trustees of different occupational pension schemes.

Please refer to Pensions Regulator.

Please refer to Pensions Regulator.

Sometimes referred to as a CETV (cash equivalent transfer value), this is the amount of money that a pension scheme must pay to another registered pension scheme when requested by a qualifying member. The amount of the transfer payment is calculated on a prescribed basis. This CETV is a statutory right for a member of an occupational pension scheme with more than 12 months to go before reaching the scheme's normal pension age or for a member of a personal pension scheme.

A member of a registered pension scheme who has reached the age of 60 and whose total pension rights from all pension schemes do not exceed £30,000 may convert these rights for a lump sum of money – a trivial commutation lump sum.

A standard legal document, in the form of a deed, which establishes, regulates and amends a trust (pension scheme).

A legal document, which may be a deed, that creates a trust The trust document appoints the trustees and states the terms of the trust, including naming the beneficiaries and the trust property that will be subject to the trust. In England and Wales the trust document usually takes the form of a trust deed.

A document, usually attached to the trust deed, which sets down the rules under which the trust (pension scheme) will operate.

A company, or an individual, appointed to carry out the business of a trust in accordance with the provisions of the trust and with the general principles of trust law. For more information on this and how it relates to employee classifications and qualifying earnings, visit this page.

Trustee advisers are appointed by the trustee board to provide legal, investment or other advice to the trustees. It is a legal requirement for the board of trustees to appoint certain advisers.


Unbanded earnings refers to the total pay components (Total Gross Qualifying Earnings) , regardless of the upper earnings limit of £50,270.00 and the lower earnings threshold of £6,240.00, as defined under Qualifying Earnings of the Pensions Act 2008.   For more information banded and unbanded earnings, click here.

The process of closing an occupational pension scheme. In the case of a DB scheme, this is normally achieved by using the assets to purchase annuities (insurance policies) for the beneficiaries or by transferring the assets and liabilities to another pension fund, in accordance with the scheme's statute or documentation. Wind up for a DC scheme is normally achieved by transferring members' funds to a new pension scheme.

A member of a registered pension scheme that is winding up may have his benefits converted for a winding-up lump sum. Currently amount of this lump sum must not exceed £18,000 when it is paid.

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