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Consumer > How a pension works > P to R
P to R
| Term | Definition |
|---|---|
| Paid Up Pension | A pension which has had regular payments permanently stopped (defined contribution pensions) or where a member of an occupational pension is no longer accumulating additional pension benefits (defined benefit pensions). |
| Payment Holiday | Period of time during which payments to a pension plan can be temporarily stopped. |
| Payment Indexation | The automatic increase in payments each year. Also known as payment escalation. |
| Pension Commencement Lump Sum (PCLS) | A tax-free lump sum available when benefits are taken from a pension. Normally up to 25% of the value of the pension benefits can be taken as a tax-free lump sum. Taking a lump sum payment usually reduces the regular income that can be provided by a pension. Also known as tax-free cash. |
| Pension Fund | The pot of money saved up in a person's pension, which is then used to provide an income on retirement. Also known as fund value. |
| Personal Pension Plan | An individual pension designed primarily for people who want to save for retirement but who are ineligible to join an occupational pension (such as the self-employed) or who simply wish to top up their retirement savings. |
| Phased Retirement | The option to use segments of a pension fund to purchase annuities, rather than using the entire fund to provide an income. The unused segments continue to be invested. |
| Pivotal Age | The age at which it may be more beneficial to contract back in to the State Second Pension. |
| Premium | A payment made to a pension plan, whether on a regular basis or as a one-off amount. Also known as a contribution. |
| Primary Protection | A method of protecting the value of pension benefits built up by 5 April 2006 from the lifetime allowance charge when benefits are taken. Only available to individuals with pension benefits at 5 April 2006 that exceed £1.5 million. |
| Protected Rights | Any contracting out payments received from the Government must be held separately from the funds built up by other types of payments. These are known as protected rights funds. |
| Retail Prices Index (RPI) | An index of the change in prices of a range of different goods and services. This is one of the main measures of inflation in the UK. |
| Retirement Annuity Contract | An older type of individual pension available before the launch of personal pensions. Ceased to be offered from 1 July 1988. |
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