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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

Ordering

The Eighth edition of Pensions Terminology is available at £20 per copy or £15 per copy when ordering ten or more. It can also be bought as a pdf file for individual or company intranet use. For further details and to download a copy of the order form please contact qualifications@pensions-pmi.org.uk

Pensions Terminology (Eighth Edition) is sponsored by Willis Towers Watson.

Willis Towers

Copyright

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.

Liability

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.
 

APPROPRIATE PERSONAL PENSION SCHEME (APP)

A [personal pension scheme] that has received an [appropriate scheme certificate] allowing individuals to join as a means of [contracting out] of [State Second Pension].

Contracting out through such a scheme will cease on 6 April 2012.

APPROPRIATE PERSONAL PENSION STAKEHOLDER PENSION SCHEME (APPSHP)

A [personal pension scheme] which operates on the same basis as an [APP] scheme but with [stakeholder pension scheme] status.

APPROPRIATE SCHEME

A scheme such as a [personal pension scheme], [stakeholder pension scheme] or [FSAVC] scheme which has an [appropriate scheme certificate] granted by [HMRC National Insurance Contributions Office], enabling individuals to use it for [contracting out].

Contracting out through such a scheme will cease on 6 April 2012.

APPROPRIATE SCHEME CERTIFICATE

The certificate issued by [HMRC] [National Insurance Contributions Office] to a [personal pension scheme], [stakeholder pension scheme] or to an [FSAVC] scheme confirming that the scheme satisfies the conditions required for [contracting out].

ARTICLE 157

Article 157 (originally Article 119, then Article 141 of the Treaty of Rome) of the Treaty on the Functioning of the European Union, providing that men and women are entitled to equal pay for equal work.

See also [Barber judgment].

ASSESSMENT DATE

The date of the employer's insolvency and the date on which the [assessment period] for entry to the [Pension Protection Fund] starts.

ASSESSMENT PERIOD

The period starting on the [assessment date] during which the [Pension Protection Fund] works with the [trustees] to assess if it can assume responsibility for the scheme.

ASSET ALLOCATION STRATEGY

The splitting of the [assets] of a [pension scheme] between the various [asset classes] such as [equities], [bonds], [alternative investments] and cash. This will primarily reflect the long term needs of the fund, the "strategic view", but may be adjusted to favour particular asset classes or markets which look attractive in the short term, the "tactical view".

ASSET AND LIABILITY MATCHING

A process of selecting [assets] which are likely to generate proceeds broadly equal to the cashflow needed to meet the [liabilities] as they occur under different economic scenarios.

An example of this would be the matching of a level pension with fixed interest securities.

See also [LDI].

ASSET AND LIABILITY MODELLING

A technique used to test the effect of different economic scenarios on the [assets] and [liabilities] of an [occupational pension scheme], the inter relationship between them, the [funding level] and [contribution rates].

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