Email* Annual Allowance
* Annuity
* Beneficiary
* Civil Partner
* Corporate Bonds
* Death Benefit Salary
* Defined Contribution Pension Scheme
* Equities
* FTSE All Share (5% Capped) Index
* FTSE All Share Index
* Government Stocks
* Index Tracking
* Lifestyle Account
* Lifetime Allowance
* Long Term Fund
* Money Purchase Pension Scheme
* Pensionable Earnings
* Protected Rights Fund
* Short Term Fund
* Switching
* Target Retirement Date (TRD)
* iBoxx Index
Annual Allowance
The AA is the total contributions in respect of an individual (employee and company) paid into the Lifestyle Plan, plus any other pension arrangement, that are eligible for tax relief.
The revised AA is £50,000 from April 2011 and will be fixed until at least 2015/16. Any contributions in excess of the AA will be taxed at the employee's full marginal rate of income tax.
Carry forward of unused AA
If any individual exceeds the AA in any tax year, rather than immediately triggering additional tax, they can carry forward any unused AA from the previous 3 years to offset this year's contributions. This commenced immediately from April 2011, with a notional AA of £50,000 applying for the last 3 years.
Annuity
An annuity is the pension purchased at retirement from your accumulated account, after you have taken any tax-free cash. An annuity is payable for your lifetime and may continue at a lower level to your spouse in the event of your death after retirement.
Beneficiary
This means one or more persons or bodies as the trustees consider would be appropriate recipients of all or part of the lump sum benefits payable on a Member's death
Civil Partner
A partner of the same-sex with whom you have entered into a legally recognised relationship (i.e. a 'civil partnership'). Civil Partnerships first started in the UK on 5th December 2005.
Corporate Bonds
These are similar to government bonds, but they are issued by non-government agencies and companies. Interest is paid at a fixed rate over the term of the bond and a capital sum is repaid at the end of the term. Corporate bonds are rated by independent organisations according to their ability to be able to pay the interest payments and the capital at the end of the term. Investment grade bonds are those rated AAA, AA, A and BBB, with the highest rating AAA, followed by AA, A and BBB. Corporate bonds rated below this are known as sub-investment grade, high yield or "junk" bonds.
The Lifestyle Plan funds only invest in investment grade bonds rated AAA, AA and A. See the Investment Guide for further details.
Death Benefit Salary
This means the highest total of any consecutive 12 months Pensionable Earnings in the 48 months prior to date of death.
Defined Contribution Pension Scheme
See Money Purchase Pension Scheme.
Equities
Ordinary shares in companies ie "stockmarket investments". In the context of the Lifestyle Plan we usually mean investment in a pooled fund which comprises shares in a wide range of companies rather than shares in just one company. "UK equities" refers to pooled funds investing in companies quoted on the London Stock Exchange although most of these companies do have trading operations all over the world. Similarly each of the overseas regions (eg "Europe", "North America", etc) refers to the stock market grouping for the particular pooled fund.
FTSE All Share (5% Capped) Index
As above, but no more than 5% of the Index is invested in any one Company. The Lifestyle Plan uses this Index for its UK Equities to reduce the risk of having too much money invested in one or more very large companies.
FTSE All Share Index
The All Share Index is generally regarded as the most representative index of the overall UK stockmarket. The index currently comprises over 700 UK companies and represents over 95% of the value of the stockmarket.
Government Stocks
Sometimes called "Gilts". These are securities issued by the UK government and therefore the interest payments and the capital repaid at the end of the term are guaranteed and can be regarded as absolutely secure.
Index Tracking
This is the term given to an investment approach that is designed to specifically track the performance of a market index.
Lifestyle Account
We allocate all your contributions and the Company's contributions for you into your "Lifestyle account" which is then invested. Your Lifestyle account is therefore part of the overall funds of the Lifestyle Plan but we keep track of the contributions and changes in value for each member separately.
Lifetime Allowance
The LTA is the limit on the amount of an individual's pension benefit (funds) that qualifies for tax relief. It applies when benefits are taken and applies to all pension benefits that individuals build up over their entire working life across all pension schemes.
The LTA reduced to £1.5 million from 6 April 2012. (Previously it was £1.8 million).
Some individuals have opted for 'Fixed Protection' before 6 April 2012, in which case they retain an LTA of £1.8 million however they cannot pay any further pension contributions after 5 April 2012.
Long Term Fund
This is a part of the Lifestyle Plan's funds. It is our own in-house description for the fund which is designed to meet the needs of a typical member during the majority of his or her career. It will be invested in the types of investments which suit this objective.
Money Purchase Pension Scheme
The Lifestyle Plan is sometimes referred to as a "Money Purchase" pension scheme or a "Defined Contribution" pension scheme. This means that contributions made by you and the company are invested until you are ready to draw your benefits. The benefits at retirement may be partly in the form of a lump sum and the balance of your accumulated account is then normally used to buy an annuity with an insurance company. There are a variety of choices available to you at retirement - see Lifestyle leaflet "Your Pension - Your Choice" for more information.
Pensionable Earnings
This means actual salary including bonuses or overtime. Any such item may be excluded if notified by the company before it is paid.
Protected Rights Fund
This is the part of your Lifestyle account (if any) relating to your own and the company's contributions paid whilst you were in contracted-out employment. (From 6 April 2012, all Protected Rights (PR) effectively become Non Protected Rights (NPR) thus removing previous restrictions which applied to PR funds).
Short Term Fund
This is a part of the Lifestyle Plan's funds. It is our own in-house description for the fund which is designed to meet the needs of a typical member as he or she approaches retirement. It will be invested in the types of investments which suit this objective.
Switching
The investments in your Lifestyle account are normally automatically moved from the Long Term Fund into the Short Term Fund as you approach retirement to gradually reduce volatility. For many members this is the most suitable arrangement and it is therefore a vitally important feature of the Lifestyle Plan. This is now often referred to as "lifestyle switching" and is reflected in the name of our company pension plan!
Target Retirement Date (TRD)
This is the date you set for yourself to control the timing of the switching of your Lifestyle account from the Long Term Fund into the Short Term Fund. It does not mean you must retire at TRD. It is simply the way in which you can have personal control over your Lifestyle account in the years leading up to your expected retirement. You can change your TRD at any time to reflect your best estimate of when you think you may draw your benefits.
Remember that a change to your TRD could have an immediate impact on the way in which your account is invested.
iBoxx Index
This is a specially constructed index designed to provide a reliable benchmark for index tracking of corporate bond investments.
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