Glossary
Accrual Rate
The rate at which rights build up for each year of pensionable service in a defined benefit scheme.
Alternative Governance Structure (AGS)
Allows a company and its employees to remain involved in the management of a pension scheme but without the liability associated with being a trustee.
Auto-Enrolment
Law introduced by the government requiring all employers to enrol their workers into a qualifying workplace scheme if they are not already in one. To take effect from 1st October 2012.
Compensation
The term used by The Pension Protection Fund (PPF) to describe your pension
Consumer Price Index (CPI)
The CPI measures changes in the price level of consumer goods and services purchased by households.
Deferred Member
An occupational pension scheme member who has left service with a deferred pension or fund
Defined Benefit (DB) Scheme
A scheme where the scheme rules define the benefits independently of the contributions payable, and the benefits are not directly related to the investments of the scheme. The scheme may be funded or unfunded.
Defined Contribution (DC) Scheme
A scheme which determines the individual member's benefits by reference to contributions paid into the scheme in respect of that member, usually increased by an amount based on the investment return on these contributions. Sometimes referred to as a money purchase scheme.
FAS Scheme
The Financial Assistance Scheme (FAS) offers help to people who have lost out on their pension because they were a member of an under-funded defined benefit scheme that started to wind-up between 01 January 1997 and 05 April 2005.
Fully Funded
A pension plan that has sufficient assets needed to provide for all accrued benefits.
Group Life Master Trust
A service launched by PTL in 2010. The Group Life Master Trust is designed for those employers with life only members. Rather than set up and run their own life assurance trust, they can now use the Master Trust, saving time, effort and money as well as reducing risk.
Group personal pension (GPP) plans (Contract-based)
Group personal pensions (GPP) are personal pensions arranged by an employer fr the benefit of its employees.
Independent Trustee
A trustee who is unrelated to the person who establishes a trust (the grantor) and the beneficiaries of the trust.
Master Trust
A collection of funds from individual investors that are pooled together in order to obtain wholesale prices and rates unavailable for regular investors.
Member Nominated Trustee (MNT)
A trustee that has been voted into position by some or all of the scheme's members
Myners Report
A report to HM Treasury in March 2001 on institutional investors. It was delivered by Paul Myners and set out a code of principles for trustees to follow covering aspects such as effective decision making, performance measurement and communication with members.
National Employment Savings Trust (NEST)
New low cost national pension scheme being introduced from October 2012, starting with larger employers. Employers will be able to automatically enroll their employees into this arrangement. NEST applies to jobholders between the ages of 22 and SPA and earning £7745pa. Job holders include temporary, agency and permanent workers.
Occupational Pension Scheme (Trust-based)
A scheme set up by an employer to provide pensions and / or other benefits to employees on leaving service, on death or on retirement (excluding death-in-service only arrangements).
Pension Protection Fund, The
A fund set up under the Pensions Act 2004 to provide benefits to members of defined benefit schemes that wind up due to the employer's insolvency with insufficient assets to pay full benefits.
Risk Management
The effect of uncertainty on objectives (whether positive or negative).
The Governance Template
A framework for the good governance of a pension scheme.
The Pensions Regulator
An independent body set up under the Pensions Act 2004 to regulate occupational pension schemes from 6 April 2005. Its role is to protect members of occupational pension schemes, to promote good administration of schemes and to reduce the risk of situations arising 'that may give rise to a claim on the Pension Protection Fund.' It has the power to impose orders and fines on trustees and employers.
Scheme Administrator
It is a legal requirement for all registered pension schemes to have a scheme administrator. They are repsonsible for registering the Pension Scheme with HMRC, reporting all events relating to the scheme to the HMRC, providing information to scheme members and paying tax charges.
Section 615
A Section 615 (S615(6)) scheme allows UK Limited Companies to establish retirement benefit packages for employees who have duties outside the UK. S615(6) schemes are not ‘off-shore’ solutions – the superannuation fund is established in the UK and enjoys the credibility that schemes recognised in an EU Member state have over schemes established in off-shore jurisdictions.
Trust Deed & Rules
A legal document, or documents, executed in the form of a deed, which establishes and regulates a trust.
Trustee
An individual or company appointed to carry out the purposes of a trust in accordance with the provisions of the trust instrument and general principles of trust law.
Trustees Knowledge and Understanding (TKU/Trustee Training)
Code of practice outlining how trustees should approach training and development.
Under-Funded Pension Plan
A company retirement plan that has more liabilities than assets
Winding up
The process of terminating an occupational pension scheme, usually by applying the assets to the purchase of immediate annuities and deferred annuities for the beneficiaries, or by transferring the assets and liabilities to another pension scheme, in accordance with the scheme documentation and statute.
