• JARGON BUSTER

Pension Jargon

Frozen Pension

‘Frozen pension’ is a term often used to define a workplace pension from previous employment, which you no longer make contributions to. They’re also known as preserved or deferred pensions

Defined Benefit

This is a type of pension plan in which an employer promises a specified pension payment, lump-sum or combination on retirement that is predetermined by an equation based on the employee’s earnings. This can also be called a ‘Final Salary’ scheme or ‘Career Average.’

Defined Contribution

Defined contribution pensions can be done through working or made by one’s self. The amount you receive in retirement is dependent on the amount you contributed into the scheme, and the amount it has made on returns or interest. This can also be called a ‘Money Purchase’ scheme.

AVC

An Added Voluntary Contribution (AVC) is a top up upon your Defined Benefit scheme to receive more at retirement.

SIPP

This is a ‘Self Invested Personal Pension’ plan, which is used to used to invest into either FCA regulated or unregulated investments. Transferring into a SIPP can make you more in control of your pension funds.

SSAS

This is a ‘Small Self-Administered Scheme.’ This is almost like a SIPP and similarly it can make you more in control of your pension funds but often these are used by the self-employed.

Industry Jargon

FCA

The Financial Conduct Authority (FCA) is the financial regulatory body in the UK. It determines the operation of all regulated bodies and their restrictions and permissions.

FSCS

The ‘Financial Services Compensation Scheme’ (FSCS) determines the outcome of disputes pertaining to claims. The FSCS has a national levy paid into by the UK’s financial advisers. This levy is used to pay out compensation to customers when the firm in question is out of operation. The maximum compensation pay out with the FSCS is £50,000. When the company remains in operation, the case is sent to the FOS.

FOS

The Financial Ombudsman Service (FOS) is similar to the FSCS except with more authority to order firms to pay out compensation. The maximum compensation pay out with the FOS is £150,000.

CMC

Claims Management Companies, just like solicitors, can make a claim on your behalf.

IFA

This is an Independent Financial Adviser and is authorised by the FCA. It is the IFA’s responsibility to provide the best possible advice pertaining to your funds.

Retail Client

You are the retail client.

Pension Provider

This is who maintains and manages your account and send you letters to keep you informed of all the details. This could also be a SIPP or SSAS provider.

More Jargon

UCIS

This is Unregulated Collective Investment Scheme and is not authorised by the FCA so it is considered high-risk.

NSP or NSI

This is a Non-Standard Product or Non-Standard Investment and relate to products such as forestry, car parks, overseas property, wine, carbon credits, alternative energy, storage pods etc.

Regulated Investment

These are authorised by the FCA and are considered low to medium risk.

High Net Worth Individual

Someone who earns over £100k per year or owns £250k of assets and can handle high-risk investments.

Suitability

Suitability, which comes as a Suitability Letter from an IFA, determines an individual’s wealth, capacity for loss, attitude to risk and level of knowledge for investing. Poor suitability for a client to invest stemming from lack of care and due diligence from the IFA could result in compensation for the claimant.

Sophisticated Investor

This is someone who is experienced, knowledgable and understanding of unregulated investments.

Form of Authority

A Form of Authority or Letter of Authority once signed entitles and allows a firm to to act on your behalf regarding your pension or your claim.

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