Glossary

The State Pension is a regular payment from the government most people can claim when they reach State Pension age. Not everyone gets the same amount. How much you get depends on your National Insurance record.

For many people, the State Pension is only part of their retirement income. For example, they may also have money from a workplace pension, other pension and/or earnings.

Source: GOV UK. 25/07/2023 https://www.gov.uk/government/publications/your-new-state-pension-explained/your-state-pension-explained

A workplace pension is a way of saving for your retirement that’s arranged by your employer.

Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.

Source: UK GOV, 25/07/2023, https://www.gov.uk/workplace-pensions

Personal pensions are pensions that you arrange yourself. They’re sometimes known as defined contribution or ‘money purchase’ pensions. You’ll usually get a pension that’s based on how much was paid in.

Source: GOV UK, 25/07/2023, https://www.gov.uk/personal-pensions-your-rights

A self-invested personal pension (SIPP) is a pension ‘wrapper’ that allows you to save, invest and build up a pot of money for when you retire. It is a type of personal pension and works in a similar way to a standard personal pension. The main difference is that with a SIPP, you have more flexibility with the investments you can choose.

Source: MoneyHelper, 25/07/2023, https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/self-invested-personal-pensions

Stakeholder pensions are a type of individual pension. Some employers offer them, but you can also start one yourself.

Source: MoneyHelper, 25/07/2023, https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/stakeholder-pensions

These are usually workplace pensions arranged by your employer. They’re sometimes called ‘final salary’ or ‘career average’ pension schemes.

Source: UK GOV, 25/07/2023, https://www.gov.uk/pension-types

These are usually either personal or stakeholder pensions. They’re sometimes called ‘money purchase’ pension schemes.

They can be:

• workplace pensions arranged by your employer
• private pensions arranged by you

Source: UK GOV, 25/07/2023, https://www.gov.uk/pension-types

(a) an individual appointed by an independent intermediary or by its appointed representative or where applicable, tied agent, to provide any or all of the following services:

(i) giving advice on investments to clients;

(ii) arranging (bringing about) deals in investments or executing transactions involving, in each case, designated investments with or for clients;

(iii) managing investments;

(iv) receiving or holding client money or other client assets;

(v) safeguarding and administering investments.

(b) For the purposes of this definition, an independent intermediary is a firm acting as an intermediary but excluding:

(i) a firm which is a member of a marketing group;

(ii) a product provider which sells its own packaged products.

Source: FCA handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G2736.html?date=2013-10-03

(in relation to an authorised fund) a person who is retained by an ICVC, its directors or its ACD or by a manager of an AUT or by an authorised contractual scheme manager of an ACS under a commercial arrangement which is not a contract of service:

(a) to supply any of them with advice in relation to the authorised fund as to the merits of investment opportunities or information relevant to the making of judgements about the merits of investment opportunities; or

(b) to exercise for any of them any function concerning the management of the scheme property.

Source: FCA Handbook, 25/07/2023

(1) any person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis.

[Note: article 2(1A) of MiFIR]

(2) (in REC) a MiFID investment firm, or a person who would be a MiFID investment firm if it had its head office in the UK.

(3) [deleted]

(4) [deleted]

(5) [deleted]

(6) (in SYSC 19D (Dual-regulated firms Remuneration Code)) a firm in (3) that is a UK designated investment firm.

Source: FCA handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G596.html

An individual is a relevant UK individual for a tax year if they:

• have relevant UK earnings chargeable to income tax for that tax year,
• are resident in the United Kingdom at some time during that tax year,
• were resident in the UK at some time during the five tax years immediately before the tax year in question and they were also resident in the UK when they joined the pension scheme, or
• have for that tax year general earnings from overseas Crown employment subject to UK tax (as defined by section 28 of the Income Tax (Earnings and Pensions) Act 2003), or
• are the spouse or civil partner of an individual who has for the tax year general earnings from overseas Crown employment subject to UK tax (as defined by section 28 of the Income Tax (Earnings and Pensions) Act 2003).

Relevant UK earnings are explained under Earnings that attract tax relief above.

Source: UK GOV, 25/07/2023, https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#:~:text=Relevant%20UK%20individuals%20and%20active%20members,-Section%20189%20Finance&text=are%20resident%20in%20the%20United,joined%20the%20pension%20scheme%2C%20or

Relevant UK earnings are the type of earnings that attract tax relief and include:

• income from employment (for example salary, wages, bonus, over time or commission)
• any redundancy payment above the £30,000 tax exempt threshold
• benefits in kind which are taxable
• profit-related pay (including the part which is not taxable)
• income from a trade, profession or vocation conducted individually or as a partner personally acting in a partnership
• rental income from UK or EEA furnished holiday lettings businesses
• patent income.

This list is not exhaustive.

Source: Money Helper, 25/07/2023, https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/tax-relief-and-your-pension#:~:text=Relevant%20UK%20earnings%20are%20the,in%20kind%20which%20are%20taxable

The legislation specifies the occasions when a scheme administrator must check whether the pension benefits arising (crystallising) at that point exceed a member’s available lifetime allowance. These occasions are known as benefit crystallisation events (BCEs).

When a BCE occurs, the scheme administrator compares the value of the member’s pension benefits to the member’s lifetime allowance that is still available. Any crystallising amount that exceeds the level of lifetime allowance available is charged to tax under the lifetime allowance charge – see PTM083000.

Source: UK GOV, 25/07/2023, https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm088100

(as defined in paragraph 4 of Schedule 28 to the Finance Act 2004):

(a) a short-term annuity; or

(b) an income withdrawal.

Source: FCA Glossary, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G2896.html

in accordance with paragraph 8A of schedule 28 to the Finance Act 2004, sums or assets held in a personal pension scheme or stakeholder pension scheme and designated as available for the payment of unlimited income withdrawals.

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G3524f.html

has the meaning given by paragraph 4A of Schedule 29 to the Finance Act 2004 which, subject to the exceptions in the Finance Act 2004, includes a lump sum that:

(a) is paid on or after 6 April 2015 in respect of a money purchase arrangement;

(b) is paid when all or part of the member’s lifetime allowance is available;

(c) is paid when the member has reached normal minimum pension age (or the ill-health condition is met);

(d) is not a lump sum that, for the purposes of Part 9 of ITEPA 2003 (pension income), is treated by regulations under section 164(1)(f) and (2) of the Finance Act 2004 as a trivial commutation lump sum paid to the member; and

(e) immediately before the member becomes entitled to it, the sums or assets that are to be used to provide it:

1. (i) represent rights of the member under the scheme that are uncrystallised rights as defined by section 212(1) and (2) of the Finance Act 2004; and

(ii) do not to any extent represent rights attributable to a disqualifying pension credit.

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G3377u.html?date=2021-07-01

f you start to take money from a defined contribution pension pot, the amount that can be contributed to your defined contribution pensions while still getting tax relief on might reduce. This is known as the Money Purchase Annual Allowance or MPAA. For most people, the total amount that can be contributed to their pensions each tax year which they’ll receive tax-relief on is £60,000. This includes any contributions from your employer. But if you trigger the MPAA, this reduces to £10,000 a year.

The MPAA only applies to contributions to defined contribution pensions and not defined benefit pension schemes.

Source: Money Helper, 25/07/2023, https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa#:~:text=You%20take%20a%20tax%2Dfree,take%20any%20income%20from%20it.

has the meaning in Part 1 of Schedule 29 to the Finance Act 2004.

[Note: http://www.legislation.gov.uk/ukpga/2004/12/schedule/29/part/1]

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G3524p.html

If you start to take money from a defined contribution pension pot, the amount that can be contributed to your defined contribution pensions while still getting tax relief on might reduce. This is known as the Money Purchase Annual Allowance or MPAA. For most people, the total amount that can be contributed to their pensions each tax year which they’ll receive tax-relief on is £60,000. This includes any contributions from your employer. But if you trigger the MPAA, this reduces to £10,000 a year.

The MPAA only applies to contributions to defined contribution pensions and not defined benefit pension schemes.

Source: MoneyHelper, 25/07/2023, https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

The current lifetime allowance is £1,073,100.

The rate of the tax you pay on pension savings above the lifetime allowance depends on how the money is paid to you and when you took your pension savings.

If you took your pension before 6 April 2023, the rate is:

• 55% if you get it as a lump sum
• 25% if you get it any other way, for example pension payments or cash withdrawals

If you took your pension on or after 6 April 2023, there is no lifetime allowance charge. This applies if you took it as a lump sum or any other way, for example pension payments or cash withdrawals. Instead you’ll pay Income Tax on some or all of the lump sum. Your pension provider will take off the charge before you get your payment.

You might be able to protect your pension pot from reductions to the lifetime allowance.

Source: GOV UK, 25/07/2023, https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax.

You’ll only pay tax if you go above the annual allowance. This is £60,000 this tax year.

Source: GOV UK, 25/07/2023, https://www.gov.uk/tax-on-your-private-pension/annual-allowance

Investments are something you buy or put your money into to get a profitable return.

Most people choose from four main types of investment, which are grouped according to characteristics they have in common. These are known as ‘asset classes’:

• shares – you buy a stake in a company
• cash – the savings you put in a bank or building society account
• property – you invest in a physical building, whether commercial or residential
• fixed interest securities (also called bonds) – IOUs given in return for loaning money to a company or government.

Source: Money Helper, 25/07/2023, https://www.moneyhelper.org.uk/en/savings/investing/investing-beginners-guide

The various assets owned by an investor are called a portfolio. As a general rule, spreading your money between the different types of asset classes helps lower the risk of your overall portfolio underperforming.

Source: Money Helper, 25/07/2023, https://www.moneyhelper.org.uk/en/savings/investing/investing-beginners-guide

(in COBS and (in relation to firm type) in SUP 16.10 (Confirmation of firm details)) a person who, acting only on behalf of a client, manages designated investments in an account or portfolio on a discretionary basis under the terms of a discretionary management agreement.

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G1380.html

A Standard Asset must be capable of being accurately and fairly valued on an ongoing basis and readily realised within 30 days, whenever required.

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/IPRU-INV/5/9.html#:~:text=A%20Standard%20Asset%20must%20be,within%2030%20days%2C%20whenever%20required.

a document prepared in accordance with the rules on preparing product information (COBS 13).

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G2471.html

information describing projected performance and the effect of charges prepared in accordance with the rules on preparing product information (COBS 13).

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G2472.html

an annual illustration of the contributions made for the benefit of, and the potential benefits due to, a member of a personal pension scheme, which is prepared in accordance with the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (SI 2013/2734).

Source: FCA Handbook, 25/07/2023, https://www.handbook.fca.org.uk/handbook/glossary/G2550.html