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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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Immediate payment of retirement [benefits] on medical grounds before [normal pension date]. The benefit may exceed that payable on [early retirement] in other circumstances.


An [annuity] which commences immediately or shortly after its purchase.


Where this relates to a [pension credit] it is the period of four months during which the [pension scheme] must implement the [pension sharing order].


A notice issued by the [Pensions Regulator] to a person whom they believe has breached legislative requirements.

The notice directs the person to take (or refrain from taking) certain actions, and must contain information relating to the breach in question and the steps taken to remedy the breach together with timescales for compliance. Civil penalties may apply if the improvement notice is not complied with.


An exercise in which a sponsoring employer of a [defined benefit scheme] seeks to remove some or all of its [liabilities] by persuading [members] to transfer or modify [benefits].

This is usually accompanied by some form of financial incentive.

See also [Enhanced Transfer Values].


Withdrawal by a [member] of income from a [registered pension scheme] that provides benefits on a [money purchase] basis, while any [annuity] purchase is deferred.


See [income drawdown].


An individual or firm with no direct or indirect involvement with the [pension scheme], [employer] or [members], other than performing the duties of the [auditor].

The title of the [auditor's report] is prefixed by the word 'independent' to emphasise this.

See also [scheme auditor].


An individual or corporate body with no direct or indirect involvement with the [pension scheme], [employer] or [members], other than performing the duties of a [trustee].

Under s22 to s26 PA95, an independent trustee is required, in some circumstances, to be appointed to an [occupational pension scheme], where an [insolvency practitioner] has been appointed over an employer.


An investment strategy designed to produce a [rate of return] in line with a particular index, either by replicating the constituents or by sufficient sampling to give a proxy.

See also [passive investment management] and [tracker fund].

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