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This is an annual charge on your policy which may be taken by deduction from units or calculated in the price of the units in which you invest.
Annuity
A series of regular payments you receive in exchange for your pension fund. Usually payable until you die but can be set up to provide a continuing pension for your spouse/dependant.
Annuity Rate
This is the rate at which your pension fund is converted to an annuity.
Financial Adviser
A professional who provides you with advice on your financial planning.
Fund Value
The value of your policy based on the number of units and the unit price.
Guarantee Charge
Charges made by deduction of units from your plan to pay for the cost of any guarantee which you have selected on the plan.
Income drawdown / income withdrawal
Where the pension fund remains invested and income is drawn from it. Income withdrawal is an alternative to an annuity generally providing more flexible income and death benefits.
Initial Commission
A payment made to your financial adviser at the start of your plan to pay for advice you have received.
Investment bond
An investment to which you pay a single premium – used as an investment and also provides life assurance should you die before surrendering it.
Passive fund management
A style of managing investments where they are linked to a financial index so the fun moves in line with the index. Usually less expensive than actively managed funds.
Pension Commencement Lump Sum (PCLS)
A payment which can be taken when you take an annuity or start taking income from your pension fund. This is limited to 25% of the value of your pension fund and usually payable tax-free.
Protected Rights
Pension benefits which are derived from contributions in respect of contracting out of the State Earnings Related Pension Scheme or State Second Pension
Self-invested personal pension (SIPP)
A type of pension taken out by an individual that provides wide investment options including shares, unit trusts, investment trusts and commercial property.
Surrender
An investment bond can be fully or partially cashed-in at any time. This may result in a tax liability depending on your circumstances.
Trail commission
An ongoing payment to your financial adviser.
Units
Your investment is used to purchase units in your chosen fund. Each unit will have a unit price which will change according to market movements.
Unit-linked guarantees
Unit-linked guarantees are a new concept in the UK life and pensions market and just refer to the optional guarantees available on products that are based on unit price.
Unsecured Pension (USP)
Where your pension fund remains invested and you draw income from this up to age of 75. There is a no minimum level of income but there is a maximum amount that can be taken. Often referred to as income drawdown.
Volatility
In this context we mean the level to which the unit price moves up and down. High volatility means there are larger swings between the unit price from day-to-day.
Make sure you read this Special Report by Dr. Ros Altmann for a complete understanding of the issues affecting you in retirement - what's changed, why and what to do next.
Make sure you read this Special Report by Dr. Ros Altmann for a complete understanding of the issues affecting you in retirement - what's changed, why and what to do next.