Cymraeg

Glossary

This section should help you understand some of the terms mentioned in this website. It is not intended to replace or modify any definitions found elsewhere, such as laws, regulations, forms and instructions, or scheme rules.

Accrual Rate - In a defined benefit pension scheme this is the rate at which pension benefits build up for the member. They will get a certain amount for each year of pensionable service.

Active Member - This is a person who is in pensionable service under an occupational pension scheme.

Assessment Date - This is the date on which the assessment period starts.

Assessment Period - This is the time when a scheme is being assessed to see if the Pension Protection Fund can assume responsibility for it.

Assets - These are everything that the trustees hold for the pension scheme. They can include investments, bank balances and any amounts owed to the scheme.

Defined Benefit Pension Scheme (DB) - This is where the rules of the scheme decide how much pension the member will get. There are different ways of working out the size of the pension, but the member will know which system the scheme uses. The most common type of defined benefit scheme is a final salary scheme. A defined benefit pension scheme may, for the purposes of the Pension Protection Fund, include the defined benefit part of a hybrid scheme, for example a scheme that pays a combination of defined benefit and defined contribution benefits.

Defined Contribution Pension Scheme (DC) - This is where the size of the member’s pension is not decided by the rules of the scheme. The size of the member’s pension will be affected by factors such as how much money is put into the pension fund for the member, how much the pension fund has grown and what annuity rate is available when the member retires. This type of scheme is also called a money purchase scheme.

Indexation - This is a way in which compensation in payment is adjusted from time to time with reference to changes in the level of retail prices, and possibly subject to other legal provisions.

Insolvency Events - These are the insolvency triggers set out in the Pension Protection Fund legislation. [see insolvency events for more details]

Liabilities - These are amounts which a pension scheme will have to pay now or at some time in the future. The most common liability is paying members’ pensions.

Non-Departmental Public Body - This is a body which has a role in the processes of national government, but is not a government department, or part of one, and which operates at arm's length from Ministers.

Occupational Pension Scheme - This is a scheme organised by an employer to provide pension benefits for their employees.

Pensioner - This is someone who is getting a pension at the moment.

Qualifying Insolvency Event - This is an insolvency event which meets the requirements set out in the Pension Protection Fund legislation [see qualifying insolvency events for more details].

Retail Prices Index - The general index of retail prices (for all items) published by the Office for National Statistics.

Revaluation - This is the name used for increases in compensation in deferment, i.e. between the time the member leaves the scheme and the start of their compensation payment.

Trustee - For an occupational pension scheme set up under a trust, a trustee is a person or a company appointed to carry out what the trust must do. They must follow the laws that apply to trusts.

This glossary is adapted with permission, from ‘The A to Z of pension terms’ by Plain English Campaign. For further definitions visit the ‘Free Guides’ section of their website at www.plainenglish.co.uk.