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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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See [Pooled Investment Vehicle].


An adjustment to a payment such as a [surrender] value or [transfer value] of an insurance fund to reflect current market conditions.

See [market value adjustment].


A type of [actuarial valuation] where the actuarial value of [assets] is generally taken as either the [market value] or 'smoothed' market value of the [assets] and the [actuarial assumptions] used to calculate the [actuarial liability] are set consistently with this approach.


The price at which an [asset] might reasonably be expected to be sold in an open market.

See also [fair value].


An adjustment which may be applied when a policy is surrendered, or money withdrawn, in order to reflect the [market value].

MVAs generally take the form of a charge levied on investors who withdraw some, or all, of their money from a [with-profits policy] before the policy has reached the end of its term. The MVA reflects the difference between the policy value and the actual value of the investments underlying the with-profits fund.

Firms use MVAs to try to ensure that policyholders who cash in some, or all, of their with-profits investment early do not disadvantage the remaining policyholders.


An EU Directive which came into force from 1 November 2007 for all European Member States which replaced the existing EU Investment Services Directive.

It aims to harmonise financial markets across the EU to create a consistent approach to the regulation of financial markets.

In the UK, the [FSA] has approached the adoption of MiFID through a process of consultation on areas such as best execution, conflicts of interest and senior management arrangements, amongst others.


Valuing stocks or other financial instruments in a portfolio against the current market price, for example to determine the unrealised profit or loss to date.

  1. The policy of selecting [assets] of a nature, incidence or currency similar to that of the expected outgoings, or
  2. An accounting term, meaning that income and expenditure are matched with one another.

See also [accruals concept].


Every [occupational pension scheme] will be treated as if it contains a "maternity equality rule". Essentially, this requires a woman on maternity leave to be treated in the same way as if she was working normally with respect to scheme membership, Accrual and [benefits].

The relevant statutory provision id s75 of the Equality Act 2010 and replaces the previous provisions on "unfair maternity provisions" in paragraph 5 of Schedule 5 to the Social Security Act 1989 and replicates aspects of Regulations 9 and 18A of the Maternity and Parental Leave etc Regulations 1999.


A [defined benefit scheme] with a high proportion of [pensioners] and a low proportion of [active members].

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