B
Basic State Pension
Flat rate pension provided by the State at state pension age if you have paid national insurance contributions or received credits for a sufficient number of years.
C
Concurrent Member
You may be a member of a personal pension scheme while accruing benefits under an occupational pension scheme at the same time and in respect of the same source of employment only if
- in at least one of the five tax years preceding the year in question, you have had aggregate grossed up remuneration not exceeding the remuneration limit (£30,000) for that earlier year (tax years prior to 2000-2001 do not count).
Contract-Out
This is the term used in relation to the state second pension (s2p) and the state earnings related pension scheme (serps). To be contracted-out of s2p/serps means that your pension arrangement will be providing benefits in place of s2p/serps. Please note that a sipp cannot be used to contract-out of serps.
Controlling Director
A controlling director (in the context of Section 644(6a)) is one where the director, the director's family and associates control 20% or more of the ordinary share capital of the company.
An associate is defined as:
any relative (ie spouse, partner, parents, grandparents etc including children under the age of 18)
the trustees of any settlement in relation to which the director is, or any relative (living or dead) is, or was a settlor
where the director has an interest in any shares or obligations of the company which are subject to any trust (being a trust or settlement within section 417(3) Income and Corporation Taxes Act 1988) or are part of the estate of a deceased person, any other person who has an interest therein.
D
Dependant
Dependant children: the natural or adopted children of the member may be regarded as dependant on the member if, at the time of the member's death,
the child was under 18 or
over 18 but in full time education or vocational training or
dependant on the member due to a disability.
E
Early Retirement Ages
Up until 5 April 2010 you can normally start drawing benefits from your pension from as early as age 50 but under the A-Day changes this increases to 55 by 6 April 2010.
The ability for certain occupations to retire early has been withdrawn, but for certain individuals, such as professional sports people, whose job gives them a right to draw benefits earlier than age 50, they will still be able to do so but special rules will now apply.
O
Occupational Pension Scheme
An occupational pension scheme is provided through your employment and promises to pay you a pension and/or lump sum on your retirement.
It does not include:-
- personal pension schemes / stakeholder schemes regardless of whether your employer contributes to it
- any scheme which pays benefits on your death only
- any scheme which does not seek UK tax approval including any where you have to pay tax on your employer's contributions.
An occupational pension scheme is not necessarily run directly by your employer. It may be a scheme for employees within a particular trade or industry run by a representative body and to which your employer contributes. An example of this is the Building and Civil Engineering Benefits Scheme where part of the payments made for holiday stamps is used to provide retirement and death benefits including lump sums on retirement.
P
Protected Rights
This is the name given to the fund held in respect of contracted out benefits either under an appropriate personal pension or a contracted out money purchase occupational pension scheme.
It is the basis on which the fund is used that is 'protected' ie retirement benefits cannot be taken before age 60, unisex annuity rates must be used, and the annuity must increase by RPI or 5% if less. The value of the fund is not protected as it will depend upon the value of the underlying investments. Please note that Sipps cannot hold protected rights funds.
R
Retirement Annuity Contracts
A retirement annuity contract (sometimes referred to as a Section 226 policy after the section of the Act that originally defined them) are a type of personal pension that was sold up until the introduction of Personal Pension Schemes on 1 July 1988.
If you are making contributions to a retirement annuity contract you will need to take these into account when calculating the maximum contribution you could make to a personal pension.
S
Spouse
This refers to a husband or wife in a legal marriage. An unmarried partner would have to prove that he or she was a financial dependant.
State Earnings Related Pension Scheme (SERPS)
SERPS gives you additional state pension benefits at state pension age if you are an employee. The amount you will get depends on the level of your earnings during your working life. However, if you have been a member of a contracted-out occupational pension scheme or you have contracted-out privately through an appropriate personal pension, then you will not get serps benefits for the period that you were contracted-out.
State Pension Age
The age at which state pensions can become payable.
State Second Pension (S2P)
S2P replaced serps on 6th April 2002. It is designed to give better benefits than serps for those on lower incomes and also to provide additional benefits for people such as carers and disabled.
V
Vested
The point at which pension benefits (whether USP/ASP or an annuity) are drawn under the scheme.
Want more information or have a query:
Share dealing is administered by Hoodless Brennan as Account Manager and any additional pension investment outside equity dealing or administration for the pension is the responsibility of Capita SIP Services as Plan Manager.
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