| Active member: |
An
individual who has benefits currently accruing in a registered pension
scheme. |
| Alternatively
secured pension: |
This is an alternative to annuity purchase
and is only open to those age 75 and over in a money purchase scheme.
The rules on alternatively secured pension are similar to income
withdrawal but with different limits. We do not offer Alternatively secured pensions. |
| Annual allowance: |
An annual allowance for contributions to pension schemes above
which tax charges may apply. Under a money-purchase scheme this is simply the
value of the contributions paid in over a period of time known as the "pension
input period". However, under a defined benefit or cash balance
scheme it is the increase in the value of a member's rights over the
scheme year. |
| Annual allowance charge: |
A 40% charge for a member where the total of contributions
paid (money purchase scheme) exceeds the annual allowance during
the pension input period. |
| Annuity: |
An annuity is a special investment, provided by life insurance companies. It is a way of converting a lump sum, usually the pension fund you
built up during your working years, into an income during your retirement.
You may pay tax on this income. You can choose from a number of different
kinds of annuity to tailor your income to your individual needs. We
offer two types of annuity, the Level Lifetime Annuity and the Invested
Lifetime Annuity, please see below. |
| Annuity protection lump sum death benefit: |
A death benefit that is paid as
a lump sum when death occurs during the payment of a lifetime annuity
or scheme pension from a money purchase scheme. In general, this
is the purchase price less payments made.The scheme administrator
becomes liable to a charge to income tax at the rate of 35% on the
level of payment made. This is known as "value protection". |
| Authorised member payment: |
includes pensions or pension death benefits,
lump sums or lump sum death benefits, recognised transfers, scheme
administration member payments, payments in accordance with a pension
share in order or provision, and any other payment prescribed by Regulations. |
| Benefit crystallisation Event (BCE): |
Whenever a benefit crystallisation event occurs,
a certain amount is deemed to crystallise for lifetime allowance
purposes. The amount crystallised represents the capital value of
the benefit being caught by the benefit crystallisation event. The
amount crystallised for each of the benefit crystallisation events
is measured in a prescribed way. |
| Bonus: |
A method of distributing surplus arising in a With-Profits Fund to policyholders who are invested in the fund. |
| Chargeable amount: |
Any amount that is crystallised at a benefit crystallisation
event that exceeds the lifetime allowance. This amount gives rise
to a lifetime allowance charge. |
| Defer benefits: |
This
is where you decide that you want to put back your retirement date.
We will not pay any benefits to you until you tell us to. Remember
that you cannot take tax-free cash on or after your 75th birthday.
So, if you want this particular benefit you will need to contact us
well before then. We will continue to collect contributions until you
tell us otherwise. |
| Dependant: |
A
person who is married to or a Civil Partner of the member at the date
of the member’s death; a child of the member if the child has
(i) not reached the age of 23 or (ii) has reached age 23 and, in the
opinion of the scheme administrator, was at the date of the member’s
death dependent on the member because of physical or mental impairment;
a person who was not married to the member at the date of the member’s
death and is not a child of the member is a dependant of the member
if, in the opinion of the scheme administrator, at the date of the
member’s death the person was financially dependant; a person
who was financially dependant on the member because of physical or
mental impairment or a person who was married to or a Civil Partner
of the member when the member first became entitled to a pension under
the scheme. |
| Dependant's annuity: |
If the money used to buy your annuity came from
a Protected Rights fund then this is a description of the annuity
we would pay to your spouse or civil partner after your death. It
is dependent on you being married or in a civil partnership at the
date on which your original annuity starts. We will continue to pay
this annuity to: (a) the spouse you are married to on the date of
death; or (b) The civil partner where the civil partnership has not
been dissolved or annulled on date of death. The amount will be 50%
of your original benefit. |
| Enhanced protection: |
A means of protecting benefits from the lifetime
allowance charge provided certain conditions are met (for example,
in money purchase schemes, there must be no further accrual pension
contributions after 5 April 2006). |
| Estate: |
The excess, if any, of the value of assets in a
With-Profits Fund over the value of assets needed to support the current and expected future
liabilities of a With-Profits Fund. |
| flexi groups |
A group personal pension plan designed to accept variable contributions for people with earnings which are not the same each month. |
| free standing avc |
Free Standing Additional Voluntary Contribution policies
provide additional pension benefits for those who are already members of a company
pension scheme. They are set up separately from the main company
scheme with an insurance company, building society or other provider
that you choose. |
| group money purchase scheme |
An occupational pension scheme set up by an employer for the benefit of their employees. |
| guaranteed annuity rate (GAR) |
Annuity rates move in line with market conditions but where your policy includes a guaranteed annuity rate we will calculate your pension using the better of the guaranteed annuity rate and our current rate. |
| Guarantee period: |
An annuity, which continues to pay an income for
five years. If you die before the end of the guaranteed period we
will pay the annuity for the remainder of that period. |
| Ill-health condition: |
It is possible for member’s to take their
benefits before age 50, or 55 in the case of ill-health. |
| In Arrears and in Advance: |
If you select your annuity payments to be monthly in arrears, they will be paid at the end of each payment period. If you select your annuity payments to be yearly in advance, they will be paid at the start of each payment period. Please note that if your annuity is less than £35 per annum we can only pay it yearly in advance. |
| Invested Lifetime Annuity: |
An annuity that has the potential to grow.
Bonuses may be added annually by way of an increase to your regular
payment, although the amount may vary from year to year. Your annuity
is guaranteed never to fall. Once added, bonuses cannot be taken
away. It will start at a lower value than a Level Lifetime Annuity
but over time may pay out a higher amount. This is not a full description
of this product’s benefits and risks. Please refer to the Key
Features and illustrations which we will send you before asking you
to confirm your choice. |
| Joint life annuity: |
On your death, we will continue to pay the annuity
to the person named on your application form, if they are still alive
and they are:
- Your spouse and still married to you; or
- Your civil partner and the civil partnership had not been dissolved or
annulled; or
- Your partner, other than spouse or civil partner, who is financially dependent
on you immediately before your death.
The amount will be 50% of your retirement income. |
| Level Lifetime Annuity: |
An income that pays the same amount until you die. Your annuity is guaranteed never to fall. It will start at a higher value than an Invested Lifetime Annuity
but will give you no protection against inflation. This
is not a full description of this product’s benefits and risks. Please
refer to the Key Features and illustrations which we will send you before asking
you to confirm your choice. |
| Lifetime allowance: |
The lifetime allowance is an overall maximum
on the amount of pension savings that any one individual can accumulate
in registered pension schemes without being subject to the lifetime
allowance charge. The 'standard lifetime allowance' for the 2007/08
tax year is £1.6m. |
| Lifetime allowance charge: |
Anyone who has pension benefits with a
value in excess of the standard lifetime allowance after 5 April
2006 will be subject to a tax charge of up to 55% on their excess
benefits value known as the lifetime allowance charge. Special rules
apply to those with transitional protection. |
| Lifetime annuity: |
Benefits are secured by purchasing an annuity for
life from an annuity provider. |
| Open Market Option: |
You can decide to take your money built up with
us and buy an annuity with another insurance company. If you want
to take your tax-free cash, then we have to pay that before sending
the remainder to the other insurance company. |
| Pension commencement lump sum: |
This is the new name for tax-free cash. It is a lump sum that can be paid when an individual starts to receive a pension, but only if the pension income starts before the individual's 75th birthday. |
| Personal pension |
Personal Pensions are savings policies for retirement for individuals. They
are able to receive regular and single contributions from those
who are employed, self-employed, or from an employer. |
| Primary protection: |
Members that have a benefits value at 5 April 2006 of more than £1.5 million can use primary protection to reduce or eliminate the chance
that a lifetime allowance charge will apply. |
| Recognised transfer: |
A transfer representing a member's accrued rights
under a registered pension scheme to another registered pension scheme
or a qualifying recognised overseas pension scheme (QROPS). |
| Registered pension scheme: |
To benefit from tax privileges all pension
schemes must be registered with HM Revenue and Customs. Schemes set
up before 6 April 2006 will normally be automatically registered. |
| Relevant UK Earnings: |
This means either employment income; income
which is chargeable under Schedule D and is immediately derived from
the carrying on or exercise of a trade, profession or vocation (whether
individually or as a partner acting personally in a partnership);
or income to which section 529 of Income and Corporation Taxes Act
1988 (ICTA) (patent income of an individual in respect of inventions)
applies. |
| Relevant UK individual: |
An individual is a relevant UK individual
for a tax year if:
- the individual has relevant UK earnings chargeable to income tax for that year
- the individual is resident in the United Kingdom at some time during that year
- the individual was resident in the United Kingdom both at some time during the five
tax years immediately before that year and when the individual became
a member of the pension scheme, or
- the individual, or the individual's spouse, has for the tax year general earnings
from overseas Crown employment subject to UK tax.
|
| retirement protection option |
Available on certain personal pension plans. It helps protect you from the effects of significant changes in the stock market and interest rates near to retirement. We do this by moving your money away from unit-linked funds into lower-risk funds like our Fixed Interest and Deposit based investments. |
| Serious ill-health: |
It will be possible for members to totally commute
any benefits not yet in payment on the grounds of serious ill-health
at any age. Before this can be done the scheme administrator will
need to obtain medical evidence that the member’s life expectancy
is less than 1 year. The amount of the commuted benefits will be
tested against their available lifetime allowance, and as long as
the benefits are less than this they will be paid tax-free. |
| Short service
refund lump sum: |
A lump sum benefit paid to a member of
an occupational pension scheme because they have stopped accruing
benefits under the scheme and have less than two years of pensionable
service under the scheme. |
| Single life annuity: |
An annuity which makes no provision for anyone
else after any chosen Guarantee Period. |
| stakeholder pensions |
A personal pension plan introduced on 6 April 2001. It has a low
minimum contribution and a maximum annual charge of 1%. There are
no penalties for stopping or suspending contributions or for transferring
the fund to another provider. It has the same rules as a personal
pension for buying an annuity. |
| Standard lifetime allowance: |
The standard lifetime allowance creates
a ceiling on the tax-advantaged benefits value that can be built
up by an individual in all registered pension schemes. The value
for the 2007/08 tax year is £1.6m. |
| Tax-free cash: |
You may be able to take up to 25% of your pension
savings as a tax-free lump sum. This is also known as the pension
commencement lump sum. |
| Trivial commutation: |
It is possible for benefits to be taken as a lump sum, but the following must apply:
- the scheme rules allow it
- no previous trivial lump sum paid more than 12 months ago
- all of the benefits
under the scheme have to be taken at the same time
- the total benefits value of the individual’s pension savings is not more than
1% of the standard lifetime allowance in force at that point e.g. £16,000
for 2007/08
- the member has some standard lifetime allowance available
- the member is between ages 60 and 75
- after the payment the member has no rights left in the scheme
- 25% of lump sum will be tax-free, the balance will be taxed at the member's marginal
rate.
|
| Trivial commutation lump sum death benefit: |
A lump sum death benefit paid to a dependant of a scheme member who
died before age 75 because that dependant's entitlement under that
scheme is deemed trivial. |
| Unauthorised member payment: |
a payment by a registered pension scheme
to or in respect of a member of that pension scheme that is not an
authorised member payment, or anything which is specifically prescribed
as being an unauthorised payment in respect of the member. |
| Unsecured pension (USP) |
A policy which allows you to take an income from it without purchasing an annuity. The income allowed must be below the limit set by the Government Actuary's Department. |
