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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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The use of borrowed money to increase the investment in a portfolio, which increases [risk] by magnifying both gains and losses. This may be achieved by using [derivatives].

Also refers to the debt / equity ratio on a companyƒ??s [balance sheet].


The canon of accounting methods, including [accounting standards], which together constitute best practice in respect to the form and content of financial statements, and the accounting policies and disclosures adopted for the preparation of financial information.

The term can be applied to distinguish between accounting methods used in different circumstances and locations, for example small company GAAP and UK GAAP, and is sometimes referred to as 'generally accepted accounting practice'.


Sterling [bonds] issued by the British Government.


A [custodian] with responsibility for custody of a number of [assets] of different classes with different fund managers.

Contrasts with multi-manager portfolios each having a separate [custodian].


A set of global ethical principles established by the Chartered Financial Analyst Institute that provide guidance to investment firms on how to calculate and report their investment results to prospective clients. The standards allow [pension funds] and other institutional investors to make comparisons between investment managers and are intended to ensure that their investment managers compete for their business on the basis of ƒ??fair representation and full disclosureƒ?? of their investment performance.


An investment strategy that attempts to exploit short term market inefficiencies by establishing positions in a range of markets with the objective of profiting from relative movements across those markets.


Issued by the [scheme actuary] to the [trustees] certifying that the [cash equivalent] has been calculated using methods and assumptions in accordance with legislative requirements and [guidance notes].


One of the [Guidance Notes] published by the Institute and Faculty of Actuaries (and adopted by the [BAS] in 2007). It sets out descriptions of the [funding methods] that are in most common use.

It was made obsolete in April 2011 and had not been replaced at the date of publication.

See also [Technical Actuarial Standards].


Acts as an actuarial consultancy, providing advice to many of the public service pension schemes. GAD is usually the body which certifies a private sector scheme as [broadly comparable] for [Fair Deal] purposes.


See [salary grade scheme].

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