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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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A code setting out good practice on engagement between institutional investors and investee companies. The UK Stewardship Code was published in July 2010. Its purpose is to enhance the quality of engagement between institutional investors and and companies to help improve long-term returns to shareholders and the efficient excercise of governance responsibilities.

The code is seen as a complimentary to the [UK Corporate Governance Code] for listed companies and should be adopted on a 'comply or explain' basis.


A payment made by a [registered pension scheme] to an [employer] that is not an [authorised employer payment] under the FA2004 or is treated by [HMRC] as such a payment.


A payment made by a registered pension scheme to a member that is not an [authorised member payment] under the FA2004 or is treated by [HMRC] as such a payment.


Any [unauthorised member payment] or [unauthorised employer payment].

See also [authorised payment charge], [authorised member payment] and [authorised employer payment].


A tax charge that arises when a [registered pension scheme] makes an [unauthorised payment].

The relevant statutory provision is s208 FA2004.


A tax charge which arises when a [registered pension scheme] makes total [unauthorised payments] that exceed a set limit in a specified period of not more than twelve months.

The relevant statutory provision is s209 FA2004.


Funds held in respect of a [member] that have not been used to provide that [member] with a [benefit].

In the case of a [cash balance] arrangement it is the funds that would be available if the member decided to draw the benefits.


Where a pension arrangement has [assets] less than those required to meet its [liabilities].

See [actuarial deficiency].

  1. The analysis of the risk inherent in providing an insurance policy. It involves an investigation of the circumstances surrounding the subject to be insured. The policy may be written on special terms or insurance may be refused, if the risk is deemed to be higher than average.
  2. The practice by which flotations of shares on the stock exchange are sometimes underwritten by financial institutions. They agree to purchase the shares, at a pre-determined price, if the shares are not all sold on the market, receiving a fee for doing so.

See [Not Alloacted Assets].

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