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Consumer > How a pension works > A to C
A to C
| Term | Description |
|---|---|
| Actuary | A financial expert who calculates the risks and costs relating to insurance products. |
| Additional Voluntary Contributions (AVCs) | Payments a member of an occupational (company) pension can make in addition to those they are required to by their employer in order to boost retirement benefits. |
| Alternatively Secured Pension | This is an alternative to annuity purchase and is only open to those age 75 and over. The rules on alternatively secured pension are similar to income withdrawal but with different limits. |
| Annual Allowance | An annual limit on payments to pension schemes, above which tax charges may apply. For defined contribution pension schemes (such as personal pensions and stakeholder pensions) this is simply the value of payments made for the member, including any employer payments. For defined benefit pension schemes it is the increase in the value of the member's rights. The annual allowance is currently £235,000 (2008/09 tax year). |
| Annuity | A financial product that provides a regular income for life normally purchased with funds built up in a pension plan. The income can be fixed or increase over time and if selected can continue to a spouse on death of the annuitant (see below). |
| Annuitant | The person that purchases an annuity or on whose life the annuity is based. |
| A-Day | The date (6 April 2006) when new pension legislation designed to make pensions simpler and easier to understand came into force. |
| Basic State Pension | A flat rate payment (not earnings related) paid by the Government to those at State Pension Age and who have met the minimum National Insurance Contribution requirements. Currently £90.70 per week for a single person (2008/09 tax year). |
| Bid-Offer Spread | The difference between the price at which units in an investment fund are bought and sold. |
| Bid Price | The price at which a units in a particular investment fund are sold. |
| Bonus | An additional payment made to a with profits plan. During the term of the plan a regular bonus (also known as annual or reversionary bonus) may be added each year and, at the end of the plan, a final bonus (also known as terminal bonus) may also be added. |
| Buy Out Plan | An individual pension plan designed to accept benefits transferred from a previous occupational (company) pension scheme. Sometimes known as a Section 32 Buy Out Plan. |
| Carry Back | The ability to have payments to a personal pension plan or retirement annuity contract treated for tax purposes as if they had been paid in a previous tax year. This option ceased from 31 January 2006 for personal pensions and from 31 January 2007 for retirement annuity contracts. |
| Carry Forward | The facility to make larger payments than normally permitted by carrying forward any unused tax relief from the previous 6 tax years to the current tax year. Only available to retirement annuity contracts. This option ceased from 6 April 2006. |
| Commission | A payment made by insurance companies to financial advisers for placing business with them. |
| Company Pension | See occupational pension. |
| Contracting Out | The process of opting out of the State Second Pension for a particular tax year in return for either a payment from the Government into a pension plan (defined contribution pensions) or lower National Insurance Contributions (defined benefit pensions). The payment from the Government is known as a contracting out payment or rebate. |
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Scottish Life is a division of Royal London and markets products produced by Royal London. Royal London consists of The Royal London Mutual Insurance Society Limited and its subsidiaries. The Royal London Mutual Insurance Society Limited provides life and pension products, is a member of the Association of British Insurers and is authorised and regulated by the Financial Services Authority, registration number 117672. Royal London Marketing Limited acts as an insurance intermediary for general insurance products and is authorised and regulated by the Financial Services Authority, registration number 302391.
