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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).

Its purpose is to encourage all pensions professionals to speak the same language. It is revised and updated periodically and the current (eighth) edition was launched in June 2011.  It is now recognised as a standard reference work.

If you have any comments regarding Pensions Terminology contact the Qualifications Department at qualifications@pensions-pmi.org.uk


The Eighth edition of Pensions Terminology is now available for free as a pdf only. You can download it here.

Pensions Terminology (Eighth Edition) is sponsored by Willis Towers Watson.

Willis Towers


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.

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An annual charge levied for the management of an invested fund. It is usually expressed as a percentage of the total fund.

See [level annual premium method].


The objective of an annual report is to provide information relevant to those participating in and managing the scheme, such as existing and prospective [members], [trustees] and [participating employers], and to external parties involved with the scheme, such as [HMRC], the [Pensions Regulator] and the [Pension Protection Fund].

It will contain the specific information that is required to be made available by trustees in relation to each [scheme year] under the [Disclosure Regulations]. Subject to certain exceptions, this must include a copy of the [audited accounts] and other information specified including an [investment report]. It will also include a [trustees' report] the [auditor's report], the [auditor's statement about contributions] and appropriate actuarial information.

Trustees may publish a simplified summary report, the contents of which may vary significantly depending on the scheme and its circumstances.


See [Scheme Return].


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.

An annuity may take one of a number of different forms including [compulsory purchase annuity], [deferred annuity], [purchased life annuity] and [reversionary annuity].


An [annuity] payable for a fixed period irrespective of whether the annuitant is alive.


Anti franking legislation requires that statutory indexation of an individual's [Guaranteed Minimum Pension (GMP)] is paid in addition to any amount by which the scheme benefits exceed the GMP, and is not deemed to be covered or "franked" by other scheme benefits.

The requirements are covered in Chapter III of Part IV PSA93 and if brought into force Part II of Schedule 5 of the Child Support, Pensions and Social Security Act 2000.

The tax regime, covering tax years 2009/10 and 2010/11, which prevented high earning individuals (broadly those whose taxable income is more than ¶œ130,000 a year) from attempts to avoid the post 6 April 2011 restrictions on pensions tax relief by making additional pension savings during this period.

Are persuasive rather than prescriptive. However, they are indicative of good practice, even though they may be developed without the full process of consultation and exposure used for [APB] Standards.

See also [Auditing Practices Board (APB)].


The amounts to be added when calculating the minimum [benefit] for the purpose of the [anti franking requirements], in respect of any further benefit accruing after [contracted out] employment ceases, or any enhancement of benefits in excess of the GMP due to postponed payment.

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