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Pensions Terminology

Pensions Terminology is a glossary of terms which is produced in conjunction with the Pensions Research Accountants Group (PRAG). Pensions Terminology ninth edition is to be released shortly.


Details will be released shortly to order the 9th edition of the Pensions Terminology.


Copyright to Pensions Terminology has been ceded by PRAG to The Pensions Management Institute in recognition of our educational role. Attention of users is drawn to the existence of this copyright, but as both organisations are anxious to encourage standardisation of terminology for all those associated with pensions, the use of definitions of individual terms is encouraged.

Reproduction of larger sections will normally be permitted on application, provided that such use is acknowledged.


Neither PRAG, nor the members of any working party or committee thereof, can accept any responsibility or liability whatsoever (whether in respect of negligence or otherwise) to any pension scheme trustee or member or third party, wherever situate, as a result of anything contained in or omitted from this publication nor the consequences of reliance or otherwise on the content of this publication.

AAF 01/06

Guidance issued by the Audit and Assurance Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW) to provide guidance to [reporting accountants] on undertaking an [assurance engagement] and providing a report in relation to the internal controls of a [service organisation].

The guidance was issued in June 2006 and expanded in June 2009. It replaced [FRAG 21/94] guidance.


An [investment strategy] that aims to achieve a given level of long-term return, often related to cash or gilt yields, rather than a return relative to a specific [benchmark], index or inflation measure.


Provision by a scheme of an [accrual rate] greater than one sixtieth of [pensionable earnings] for each year of pensionable service.


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.

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¶ÿa [cash basis] is used.


Accounting standards developed by the [Accounting Standards Board] are contained in [Financial Reporting Standards (FRSs)]. Standards are issued following consultation in Discussion Papers and Financial Reporting Exposure Drafts (FREDs).


The role of the Accounting Standards Board (ASB) is to issue [accounting standards] in the United Kingdom.  It collaborates with accounting standard-setters in other countries and the International Accounting Standards Board (IASB) in the development of international standards.


The rate at which rights build up for each year of [pensionable service] in a [defined benefit scheme].


The accounting principle whereby revenues and costs are recognised as they are earned or incurred, rather than when money is received or paid. This is in contrast to the [cash basis].

Also known as [matching] (see 2nd definition ).


The [benefits] for service up to a given point in time, whether [vested rights] or not. They may be calculated in relation to current earnings or projected earnings.

Allowance may also be made for [revaluation] and/or [pension increases] required by the [scheme rules] or legislation.

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