Spelling Out All The ABCs Of Financial Jargon In Plain Language

Additional Voluntary Contributions:

Additional contributions paid by a member of an occupational pension scheme in order to secure benefits over and above those set out in the rules of the scheme.

Where an occupational pension scheme does not provide access to an Additional Voluntary Contribution (AVC) facility, a standard PRSA must be offered for this purpose.

Bridging Pension:

An additional pension benefit paid between the date of retirement and some later date, when it will reduce or be discontinued.

The most common type of bridging pension is paid in the interval between the date of retirement and the Social Welfare pension age, where Social Welfare benefits are taken into account in calculating the scheme pension, but members retire before these become payable.

Compulsory Purchase Annuity:

An annuity that must be purchased on retirement for a member of an insured pension scheme or for the holder of a personal retirement bond.

Defined Contribution Scheme:

Provides a pension based on the accumulated value of contributions paid to a pension scheme and the investment returns earned on those contributions.

Endowment Assurance Policy:

A policy which provides for a lump sum at a future maturity date or earlier on death.

While there are many types of pensions available, the choices are easier to grasp than you might think.

While there are many types of pensions available, the choices are easier to grasp than you might think.

Flexible Benefits:

A system of benefit provision in which employees are given a choice on the makeup of their total benefit package from an employer.

Typically, under such a system, employees may choose how much of the money made available by the employer would be used for the provision of pensions, death benefits, disability health insurance, holidays, etc.

Minimum limits may be laid down for certain benefits, either because they are specified by the scheme design or are made necessary by employment law or by Revenue practice.

Guaranteed Payment Period:

A period, normally five years, for which payment of a pension would be guaranteed by the scheme rules, whether the pensioner lives or dies.

Interim Trust Deed:

A form of trust deed commonly used to establish a pension scheme on broadly stated terms, leaving the detailed provisions and rules to be provided later by a definitive trust deed.

Long Service Benefit:

Pension benefits payable at or after the normal pensionable age (NPA), assuming that you remain in relevant employment until the NPA.

Long service benefit may take the form of regular pension payments and/or a lump sum.

It also includes any benefits payable on death after the NPA to your spouse or dependants.

These benefits may be a separate pension or, for example, a guaranteed payment of your pension for a set period after your death.

Means Test:

An earnings limit imposed by Government to determine eligibility for the State Pension (Non-contributory) and other social assistance payments, including widowers pensions and dependent relative allowances.

Occupational Benefit:

Payments in the form of pensions, payable in respect of termination of service, retirement, old age, death, interruptions of service by reason of sickness or invalidity, accidents, injuries or diseases arising out of or in the course of a person’s employment, unemployment or expenses incurred in connection with children or other dependants.

Relevant Person:

In relation to any scheme, for the purposes of the rules on whistle-blowing, relevant persons are the trustees, actuary, auditor, administrator, insurer, investment manager and anyone employed by such persons.

Legal advisers are excluded. For the purposes of the Pensions Ombudsman regulations, the relevant person in relation to a scheme is the trustee/s of the scheme; or the Minister, in a public authority scheme; and, in relation to a PRSA, the PRSA provider.

Self-administered Scheme:

A pension scheme where the assets are directly invested in stock markets, etc. They may be managed by an in-house manager or an external investment manager.

The term is not used to indicate the method by which benefits and contributions are administered, but is now almost exclusively used to refer to the way in which the investments are managed.

(Source – Irish Examiner – Business – John Daly – 16/10/2019)

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