Jargon buster

Understanding pension terminology can be challenging.

Our jargon buster is here to help you navigate the key terms and concepts related to asset management and pensions.

AVCs – additional voluntary contributions: Extra payments made to a pension plan to increase retirement benefits.

 

CCF – cash commutation factors: The rate at which pension benefits can be converted into a lump sum payment.

 

CPI – Consumer Prices Index: An inflation measure that excludes housing costs.

 

DB – Defined Benefit: A pension plan where the benefits are calculated based on factors such as salary and years of service.

 

DC – Defined Contribution: A pension plan where contributions are invested, and the benefits depend on the investment's performance.

 

DWP – Department for Work and Pensions: The UK government department responsible for welfare and pension policy.

 

ERQ – Early Retirement Quotation: An estimate of pension benefits if retirement occurs before the normal retirement date.

 

FCA – Financial Conduct Authority: The regulatory body overseeing financial markets and firms in the UK.

 

Final Salary: A pension plan where the benefits are calculated based on factors such as salary and years of service.

 

GMP – Guaranteed Minimum Pension: The minimum pension that must be provided by a contracted-out pension scheme.

 

LPI – Limited Prices Index: A measure used to cap the increase in pension benefits, typically linked to inflation.

 

LRF – Late Retirement Factors: Adjustments made to pension benefits when retirement is delayed beyond the normal retirement date.

 

LSA – Lump Sum Allowance: The maximum amount that can be taken as a lump sum from a pension without incurring tax penalties.

 

LTA – Lifetime Allowance: The total amount of pension savings you can accumulate without facing extra tax charges.

 

NMPA – Normal Minimum Pension Age: The earliest age at which pension benefits can be accessed.

 

NRD – Normal Retirement Date: The age at which a person is eligible to retire and start receiving pension benefits.

 

NRQ – Normal Retirement Quotation: An estimate of pension benefits at the normal retirement date.

 

PCLS – Pension Commencement Lump Sum: A tax-free lump sum taken from a pension pot at retirement.

 

PIF – Payment Instruction Form: A form used to instruct the payment of funds.

 

PPF – Pension Protection Fund: A fund that protects members of defined benefit pension schemes if their employer becomes insolvent.

 

RPI – Retail Prices Index: An inflation measure that includes housing costs.

 

SLS – Small Lump Sum: A small amount of money taken from a pension pot, usually under specific conditions.

 

SMP – Secured Minimum Pension: A minimum pension amount that is guaranteed and secured.

 

TRIV – Trivial Cash Sum: A small lump sum payment taken from a pension pot when the total value is below a certain threshold.

 

TVQ – Transfer Quotation: An estimate of the value of pension benefits if transferred to another scheme.