Glossary of Pension Terms and Phrases (A)

Here are a list of pension terms and pension phrases beginning with the letter A.

Accrual Rate

This is the rate used to calculate the pension benefit, in a defined benefit occupational pension scheme. The most common pension accrual rate found in the UK is 1/60th of final pensionable salary for each year of pensionable service.

Additional Voluntary Contribution

These are additional contributions paid by an occupational pension scheme member to provide additional benefits. Organised on a group basis, they must not exceed 15% of total taxable earnings, including any existing scheme contribution. The resulting benefits can be money purchase or in a final salary scheme extra years of service.

Administrator

This is the person(s) or body responsible for the management of an occupational pension scheme. An administrator is required for all exempt approved pension schemes.

Age Allowance

The personal allowance against income for a person aged 65 or over. Age allowance increases for a person aged over 75, however is reduced if the persons income exceeds a certain level.

All Employee Share Schemes

Is a type of approved share ownership plan for employees introduced in April 2000. Shares are either given to employees or purchased by employees. Also subject to certain conditions the shares may receive preferential tax treatment.

Annuity

Often purchased by a lump sum of cash, an annuity is a series of regular payments. Individuals may purchase using their own capital. There are a wide range of options available such as level, escalating or guaranteed.