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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.


A financial statement which is pprepared to summarise the [assets] and [liabilities] of an entity at a particular date in time and which is designed to give a [true and fair view] of its financial position.

In [pension scheme] accounts, a [net assets statement] is required rather than a balance sheet, because this does not take account of the liabilities to pay [benefits] after the date of the statement which is dealt with in the [actuarial valuation].


A style of investment management where the [investment manager] is free to invest in all [asset classes]. This is in contrast to [specialist management].

[Trustees] may place some constraints on the manager, such as not to invest in property or [venture capital].


See [upper band earnings].


The judgment of the [European Court of Justice] (ECJ) in the case of Barber v. Guardian Royal Exchange on 17 May 1990, which confirmed that pensions count as pay for the purposes of [Article 157].


See [basic pension].


The flat rate (not earnings related) state pension paid to all who have met the minimum NI contribution requirements. Subject to certain conditions, a wife may claim on the NI record of her husband, a surviving spouse or civil partner may claim on the record of his/her deceased spouse or civil partner, and a person who is divorced or whose civil partnership is dissolved may use the former spouse's/civil partner's NI record up to the termination of the marriage/civil partnership.


One hundredth of 1% (i.e. 0.01%).


The judgment of the [European Court of Justice] (ECJ) in the case of Beckmann v Dynamco Whicheloe Macfarlane on 4 June 2002 changed the obligation to provide pension [benefits] that transfer to a transferee [employer] on a TUPE transfer.

The judgment held that any obligation to provide benefits that are neither old age nor incapacity benefits transfers from the transferring employer to the new employer. As a result, early retirement benefits on redundancy or otherwise that a transferring employee may have had in the transferring employer's pension scheme must be replicated by his new employer.


A target or measure against which performance is to be judged, which is commonly used to assess the investment performance of a fund or portfolio.

A customised benchmark may be specifically constructed for a fund or whole portfolio if that is considered more appropriate than using an industry standard.

See also [investment performance measurement].


The person or persons who have ultimate rights to the value of an investment or property, as distinct from the registered owner who may be a nominee.

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