GLOSSARY

This glossary has been compiled to provide general and simple explanations of unfamiliar terms you may encounter when using our platforms and website. Please note that it is not definitive or exhaustive.

None of the definitions provided should be taken as advice – Scottish Widows Platform does not offer financial advice. If you are still unclear about any terms, we strongly recommend you seek independent financial advice. If you don’t currently have a financial adviser, you can find one at unbiased.co.uk.

For ease of use, we recommend keeping this glossary open in a separate tab on your desktop or device so you can access it any time you need to refer to it.

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  • The authorised corporate director of a company. ACDs (Authorised Corporate Directors) are responsible for the day to day management and governance of an investment fund. They have a duty to act in the best interests of the fund's investors, and to ensure that the fund is well managed in line with the investment objectives and policies set out in its prospectus, and the regulations that apply to it.  
  • This is the total income for the tax year plus the value of any employee pension contributions and minus any allowances and/or tax relief. Income can include salary, bonus, profits from self-employment, benefits in kind, pension income (including Uncrystallised Funds Pension Lump Sums), property, savings and dividends etc. Allowances/reliefs can include pension scheme tax relief, gifts to charities and trade losses.  
  • Alternative investment funds hold non-traditional investments and/or use complex investment and trading strategies. 
  • This is the maximum amount you can pay into your pension savings each year without paying a tax charge. It’s currently £60,000 for most people and applies across all your pension pots.
  • A guaranteed income paid to a member for the rest of their life. An Annuity can be for a fixed or increasing amount, and may include a guarantee period and/or a secondary income payable to a spouse for the remainder of their life following the death of the member.
  • This describes a transaction or deal in which the buyers, sellers or investors do not already have either an existing business or personal relationship, or if they do have such a relationship then any commercial terms are determined by an independent provider, for example a surveyor or an accountant.
  • This is a payment specifically authorised under the pension tax legislation, including Pension Commencement Lump Sums and drawdown pensions.
  • This is an investment scheme where investors pool their money together with the aim of investing in a portfolio of assets overseen by a professional manager. Therefore, all the assets in that scheme are held in trust for the investors.   
  • The general term given to the bank or building societies  we   use to support our banking requirements.
  • A basis point is a common measure for interest rates and other percentages in finance. One basis point equals 0.01% (or 1/100th of 1%). Therefore, if an interest rate goes up from 3.0% to 3.5%, it has moved up by 50 basis points. Basis points are typically expressed with the abbreviations bp or bps. 
  • Any party entitled to death benefits, including any individual who is your dependant, nominee or successor.
  • An event which requires your fund to be tested against the Lifetime Allowance. Examples of this include choosing to take cash from your pension savings, entering into a flexible income drawdown arrangement and/or buying a regular income (annuity).
  • The bid-offer spread is simply the difference between the price at which you can buy a security and the price at which you can sell it.
  • A block transfer is where at least two members of the same registered scheme make a transfer simultaneously in the same transaction to another pension scheme.
  • A bond represents a loan between an investor and a borrower. When you invest in a bond, you’re agreeing to loan your money, usually to a government or company for a specific period. In exchange, you’ll receive regular interest payments until the bond matures and the loan is fully repaid at the end.
  • Also known as a scrip issue or a capitalisation issue, this is where shareholders in a company are awarded additional shares or other securities free of payment – for example, a company may give one bonus share for every three shares held. However, the nominal value of the shares does not change.
  • A day in which (UK) Financial markets are open for trading – usually any day which is not a Saturday or Sunday, Christmas Day, Good Friday or a Bank Holiday in any part of the United Kingdom.
  • Capital Gains Tax is a tax on the profit you make when you sell (an ‘asset’) that’s increased in value within your investment. It’s the gain you make that’s taxed, not the amount of money you receive. For example, if you bought an asset for £5,000 and sold it later for £25,000, you’ve made a gain of £20,000. It is not applicable to all assets and you don’t pay Capital Gains Tax if all your gains in a single year fall under your tax allowance.
  • A method of taking benefits from your pension, whereby your assets remain invested and your pension income (subject to certain limits) comes from your invested funds or by cashing in some assets within your pension. This only applies if you had designated funds for a Capped Drawdown pension prior to 6 April 2015. 
  • This allows you to make pension contributions that exceed your annual allowance and still benefit from tax relief by utilising up to a maximum of 3 previous years unused annual allowances. A Money Purchase Annual Allowance cannot be used for a Carry Forward. 
  • • Available Cash: Available cash is any cash held in your account that is not currently invested in assets. It is available for investing in assets or for withdrawals, or to pay charges.

    • Committed Cash: This is any cash that has been ring-fenced to complete any trading instructions. It is not available to be used for charges or to pay advisers.

  • The process of moving money between product providers, or to an eligible person. This applies to cash only and not assets.
  • Clearing House Automated Payment System (CHAPS) is an electronic bank-to-bank technology that enables same-day payments to be made within the UK.
  • This refers to Platform Charges,  SIPP or Pension Scheme Charges, Adviser Charges, Discretionary Investment Manager Model Portfolio Charges, transaction charges, account fees – and any other applicable charges that may  be incurred by the client from time to time.
  • A body or trust established for charitable purposes that is recognised by HMRC as a charity for tax purposes.
  • A UK resident company that is owned by five or fewer ’participators (I.e. directors, shareholders and investors) who either have control or possess the rights to have a say in important business decisions for the company.
  • A Collective Investment Scheme is a professionally managed fund which combines the money of a broad range of investors in a single investment vehicle, more commonly known as 'investment funds', 'mutual funds' or just 'funds'. They invest in assets, such as bonds, equities or cash. 
  • This is the process of buying, selling or leasing commercial real estate. Examples of commercial property transactions include:

    • acquisitions (including purchases and in specie transfers from other registered pension schemes),
    • assignments,
    • deeds of surrender of lease,
    • insurance applications,
    • mortgages,
    • occupational leases and tenancy agreements,
    • rent reviews and rent reconciliations,
    • lease renewals,
    • sales.
  • These are the types of investment that carry a higher level of risk than other securities, generally because of the way in which they are structured. These instruments require greater experience and knowledge of investments to fully understand the risks involved. Products such as warrants, securitised derivatives, convertibles, structured products, and other specialist instruments fall into this category.
  • This is the schedule we send you that contains your account information, and which confirms we have accepted the application made on your behalf by your financial adviser to open an account with us.
  • In a transaction or deal this refers to a situation where the buyers, sellers or investors have an existing business or personal relationship. Examples of connected people are:

    • a spouse or civil partner,
    • a direct relative (ancestors, brothers, sisters, or lineal descendants),
    • the spouse or civil partner of a direct relative,
    • a trustee of a settlement where the settlor is a member, or someone connected with a member,
    • a person (or that person’s spouse or civil partner) who is in partnership with a member, or with a member’s spouse or civil partner,

    • a company, which is controlled by a member and/or persons connected with a member.

    For HMRC reporting purposes, a connected person also includes close companies of which a member or another connected person is a director. A full definition is in section 1122 of the Corporation Taxes Act 2010.
  • A person has control of a company if that person is authorised to direct (or exercise indirect control over) the company’s affairs.
  • This broadly refers to someone who is a director and, either alone or with their associates, owns 20% or more of the shares in a company.
  • A convertible bond is a type of debt security that provides an investor with a right (or an obligation) to exchange the bond for an agreed number of shares in the issuing company at certain times throughout the bond's lifetime.
  • A corporate bond is debt issued by a company to raise capital and is a type of debt security that is issued by a firm and sold to investors. An investor who buys a corporate bond is effectively lending money to the company in return for a series of interest payments.
  • This is the financial institution, regulated by the FCA or other regulatory body, that holds customer assets and cash for safekeeping to minimise the risk of their loss to you. This can be in either electronic or physical form.
  • These are rules set out by the Financial Conduct Authority, which regulates financial services, which specify how firms must handle their client's money and assets.
  • The GDPR was adopted into British law after the UK left the European Union. The DPA and UK GDPR governs how your personal information is used and safeguarded by organisations and government agencies. The act states that your information can only be used ‘fairly, lawfully and transparently’ and for specified purposes, and should not be kept longer than necessary. It must also be securely protected against unauthorised use or theft. The regulations also allows you to find out what information is being stored about you, how it is being used – and to have incorrect information updated or deleted.
  • A pension scheme offered to employees by their employer where the benefits are calculated as Defined Benefits.
  • These are benefits from pension schemes where the level of benefits are calculated according to the contributions made (employer and employee), tax relief received and the investment returns earned, resulting in a total fund value which is available to provide pension benefits on retirement.
  • Sometimes also referred to as a ‘final salary pension’. These are a type of workplace pension that pay you a retirement income based on your salary and years’ service rather than your contributions. They pay a secure income for life which increases each year with inflation.
  • Dependant refers to a person who, at the time of your death:

    • is married to you, or is your civil partner,
    • was married to you, or was your civil partner, when you first became entitled to a pension under your SIPP,
    • a child of yours who has not attained age 23,
    • a child who, in the opinion of the scheme administrator, was dependent on you because of physical or mental impairment (whatever the child’s age),
    • a child of yours who was already receiving dependants’ drawdown and who reached their 23rd birthday on or after 16 September 2016,
    • any other person (not married to you, not your civil partner, nor your child) who, in the opinion of the scheme administrator:
    a. was financially dependent on you,
    b. you and the person were financially dependent on each other,
    c. the person was dependent on you because of mental or physical impairment.
  • A Discretionary Investment Manager has your authority (discretion) to manage an investment portfolio on your behalf. A discretionary management service can deliver highly tailored investment portfolios based upon your individual circumstances and objectives. They do not need to inform you every time they make a change, although many parameters can be agreed at the outset. You can, for example, specify that you want to invest in only ethical stocks, or avoid exposure to certain other stocks.
  • This is a portfolio of investments that is managed by a Discretionary Investment Manager.
  • Discretionary powers are included in a will or trust deed and allow the trustees to make certain types of decisions. They are not legally binding, but they do give the trustees options that can help them when they make their decisions on behalf of the beneficiaries. 
  • These are the rules and processes that are put in place by us that allow us to sell assets in your fund to ensure there is enough available cash in your pot to pay out your benefits. Disinvesting is a strategy by which an investor offloads or disposes of an asset or a partial stake in that asset.
  • Where a pension credit (under a pension sharing order) came from pension benefits that were already crystallised, meaning no pension commencement lump sum/ tax free cash can be paid when the receiving member puts their benefits in to payment.
  • A distribution of profits made by a company to its shareholders.
  • A method of taking benefits from your pension, whereby your assets remain invested and your pension income comes from your invested funds or by cashing in some assets within your pension.
  • Due diligence is an investigation or review performed to confirm that the facts and details provided about a third-party or an investment are true. In the financial world, due diligence refers to the examination of operational, legal and financial information before completing a transaction or partnership with another party.
  • This redirects part (or all) of a person’s pension benefits to their ex-spouse or civil partner when that person retires as an order by the court.
  • This is any company of which you are, or have been, an employee or a director. It also includes any other person to whom you are, or have been, an employee.
  • Where you have a valid Certificate of Enhanced Protection from HMRC, whatever the value of your benefits at the time they are crystallised, they are not subject to the Lifetime Allowance tax charge.
  • These are shares in the ownership of a company.
  • This is a form of sustainable investing which prioritises environmental, social, and governance (ESG) factors and analysis into investment decisions, to better manage risk and seeks to achieve sustainable long-term performance returns. 
  • These are shares or bonds in a company, government bonds, investment trusts and Exchange Traded Funds which are bought and sold on a recognised investment exchange.
  • Exchange Traded Products (ETPs) are types of securities that track underlying security, index, or financial instruments. They are comprised of a family of securities that are traded on stock markets just like a common share and are traded intraday to help investors access different countries and regions as well as different sectors and investment styles. One common ETP are Exchange Traded Funds (ETFs), similar to a mutual fund, which contains a basket of investments, that usually tracks an underlying index.
  • This is the form you complete telling the trustees of your personal pension who you wish them to pay death benefits to on your death.
  • A type of electronic bank transfer that speeds up the process of sending money. Faster payments can be made in several ways such as over the phone, online or in branch. Faster payments usually arrive within a few seconds, but can take up to two hours.
  • These are the Rules contained in the Financial Conduct Authority Handbook, which is published by them. These rules apply to all regulated firms, and there are enforcement powers for non compliance.
  • These are the rules contained in the FCA Handbook published by the FCA which sets out the rules and guidance to which FCA regulated business must adhere.
  • An FCA-authorised adviser who provides financial advice to you, and who is an employee or contractor of a Financial Adviser Firm.
  • The Financial Adviser Firm or network that is authorised and regulated by the FCA or PRA. This can also mean an appointed representative of such a firm or network.
  • The Financial Services Compensation Scheme is an independent body, established under the Financial Services and Markets Act 2000 as the UK’s statutory compensation fund of last resort, for customers of Financial Services Firms authorised by the FCA.
  • Fixed income is a class of assets and securities that pay out a set level of cash flows to investors, typically in the form of fixed interest (coupon) or dividends. Government and corporate bonds are the most common types of fixed-income products.
  • • Fixed Protection 2012: Where you have a valid Certificate from HMRC, the value of your benefits at the time they are crystallised, will be measured against a Lifetime Allowance of at least £1,800,000.

    • Fixed Protection 2014: Where you have a valid Certificate from HMRC, the value of your benefits at the time they are crystallised, will be measured against a Lifetime Allowance of at least £1,500,000.

    • Fixed Protection 2016: Where you have a valid Reference from HMRC, the value of your benefits at the time they are crystallised, will be measured against a Lifetime Allowance of at least £1,250,000.

  • A method of taking benefits from your pension, whereby your assets remain invested and your pension income comes from your invested funds or by cashing in some assets within your pension. It can give you more flexibility over how and when you receive your pension. You can take up to 25% of the scheme as a tax-free lump sum and the rest of your funds remain invested. You can then decide if you want a regular income, or withdrawals as and when you need them, with no maximum other than the remainder of your fund.
  • This is an individual defined contribution pension top-up plan that allows you to make additional payments to your plan. This type of arrangement usually gives you the option of continuing to pay into it even if you change employer.  
  • Fund Management companies take charge of all activities relating to the day-to-day operation of investment funds. This includes overseeing the investment management, marketing and central administration of the fund, as well as establishing a risk management and due diligence structure that satisfies regulatory requirements and protects investor interests.
  • The GAD (Government Actuary’s Department) rate is part of a formula that calculates the maximum amount a member of a capped drawdown scheme can withdraw from their scheme each year. The maximum amount is recalculated every 3 years up to age 75 and annually thereafter.
  • A Gilt is a UK government bond that's denominated in British pounds. They're issued by the Debt Management Office (DMO) on behalf of HM Treasury. UK Gilts are sensitive to market changes, including interest rate changes and major political events.
  • A government bond is a type of debt-based investment, where you loan money to a government in return for an agreed rate of interest. Governments use them to raise funds that can be spent on new projects or infrastructure, and investors can use them to get a set return paid at regular intervals.
  • This is used to verify a person’s identity, and ensure that they are who they claim to be. It can also be used to identify fraudulent activity.
  • Illiquid refers to an asset that cannot easily and readily be sold or exchanged for cash, such as property or works of art and antiques. These can be difficult to sell for many reasons – often it's not easy to find a buyer or the process of selling the asset can take a long time.
  • ‘In specie’ means transferring the ownership of an asset without the need to convert it into cash. It comes from a Latin phrase meaning ‘in its actual form’. In specie transfers involve the transfer of assets between two pension schemes, while in specie contributions involve the transfer of assets from an individual or company to a pension scheme. Assets involved need to be properly valued and assessed for suitability by the receiving scheme.
  • A strategy for selling assets in your accounts to create available cash  in your account and thereby allow an income withdrawal to be made. 
  • An Income Payments Order (IPO) allows for a court to direct the income of a bankrupt — or more likely a proportion of it — to be paid to the Official Receiver (OR) or any appointed trustee in bankruptcy.
  • Also called pension drawdown, this is an alternative to buying an annuity. It allows the customer to draw an annual income while leaving the rest of their fund invested.
  • • Individual Protection 2014: Where you have a valid Certificate from HMRC, the value of your benefits at the time they are crystallised, will be measured against a Lifetime Allowance at least equal to the total value of your benefits (between £1,250,001 and £1,500,000) in all registered pension schemes, and any relieved non-UK pension rights you have, on 5 April 2014.

    • Individual Protection 2016: Where you have a valid Reference from HMRC, the value of your benefits at the time they are crystallised, will be measured against a Lifetime Allowance at least equal to the total value of your benefits (between £1,000,001 and £1,250,000) in all registered pension schemes, and any relieved non-UK pension rights you have, on 5 April 2016.
  • These are fees that are levied against an account at the start of a contract for the initial services or administration provided.
  • This means all instructions received from you, your financial adviser, or Discretionary Investment Manager relating to an account that are not Trade Instructions.
  • Investment is purchasing an asset with the expectation that it will grow in value, producing an income or both.
  • Gold of a purity not less than 995 thousandths, which is in the form of a bar or a wafer of a weight accepted by the bullion markets.
  • The client identification number that is issued by us and stated on the Confirmation Schedule and which is specific to you.
  • An ISA is a savings account that allows you to save tax-free. There are four types of ISA: cash ISAs, stocks and shares ISAs, innovative finance ISAs and lifetime ISAs. You can save into one type of ISA each tax year, and the maximum you can save into an ISA in this tax year is £20,000.
  • This means a client who holds an account with another person or persons.
  • This refers to a person who is aged under 18 years old.
  • A Key Features Document is a document that financial companies are obliged to provide you when you buy certain regulated products. It sets out the aims, the risks and the benefits to you of purchasing or investing in the product as well as information on how it works.
  • A right to keep possession of assets belonging to the client until any charges or outstanding monies owed by the client have been paid.
  • This applied from 6 April 2006 to 5 April 2024. This is the maximum value of pension savings that you could take without a tax charge. If you took any benefits from your pension before 6 April 2024 you will have used some of your Lifetime Allowance. This will be converted into Lump Sum Allowance used when you take benefits after 6 April 2024.
  • This is a multiplier that can be applied for with HMRC , which increases your Lifetime Allowance and effectively protects some of your pension savings, for example those that originated from a pension credit.
  • Factors are based on the value of the funds to be protected (e.g. the value of the pension) and calculated as a portion of the standard Lifetime Allowance. The result is to essentially exempt those funds from the Lifetime Allowance.

    Where you have a valid Certificate from HMRC, your Lifetime Allowance is increased because you:

    • acquired a pension credit under a pension sharing order on divorce before 6 April 2006,
    • acquired a disqualifying pension credit under a pension sharing order on divorce after 5 April 2006,
    • accrued certain benefits in a registered pension scheme during a period when you were abroad and you were not a relevant UK individual. Or if you were, it was only because you were resident in the UK at some time during the previous five tax years and you were also resident in the UK when you joined the pension scheme and you were not employed by a UK resident employer,
    • transferred benefits accrued in a QROPS which have not received UK tax relief to a registered pension scheme
  • This is the amount by which your pension funds exceed your remaining Lifetime Allowance at any Benefit Crystallisation Event.
  • This is an annuity contract purchased under a money purchase arrangement from an insurance company that provides you with an income for life.
  • A Limited Partnership (LP) exists when two or more partners go into business together, but the partners are only liable up to the amount of their investment. An LP is defined as having limited partners and a general partner, who has unlimited liability.
  • A limit on the tax-free payments that can be made from all of an individuals’ pension arrangements as Pension Commencement Lump Sums (PCLSs) and/or as the tax-free part of Uncrystallised Funds Pension Lump Sums (UFPLSs).
  • A limit on the total payments that can be paid tax-free from all of an individuals’ pensions arrangements including serious ill health lump sums and lump sum death benefit payments.
  • Spot rates are the current exchange rates at which specific currencies can be bought or sold on currency exchange markets. They are the ‘right now’ rate for any given currency.
  • Market value is used to describe how much an asset or company is currently worth on the open market.
  • The average price between the best offer price of the sellers of an asset and the best bid price of the buyers of that asset.
  • These are tailored investment portfolios made up of a range of assets. They aim to achieve a particular investment objective and reflect a specified attitude to investment risk.
  • This is the amount of money you can pay into your pension pot every year without incurring a tax charge. It is currently £10,000.
  • The employee and employer agree on a set contribution level during employment (usually a percentage of salary). The contributions are invested at the discretion of the employee to build up a retirement fund. The pension at retirement isn’t guaranteed as it would be in a defined benefit/final salary scheme, but is instead based on the value of the pot at retirement.
  • This broadly means a pension fund built up from payments (such as contributions and transfers from other pension schemes) and any associated investment growth. The amount of the benefits you or a beneficiary will receive will depend on the value of the fund.
  • An investment solution that seeks to help manage risk by holding a broad range of asset classes, so a loss suffered by one asset doesn't have a disproportionate impact on the overall performance of your portfolio. The most common asset classes include company shares, bonds and cash.
  • A mutual fund is a professionally managed collective investment scheme that pools money from many investors.
  • The means by which national authorities identify an individual,in the UK this would your National Insurance Number.
  • An individual who is not your dependant but who you have nominated to receive a drawdown pension and/or annuity payments in the event of your death. The Scheme Administrator may also nominate a nominee – but only where you have no surviving dependants or nominees and you did not nominate a charity.
  • Any asset that is not a Standard Asset. Examples of Non-Standard Assets are:

    • bank account deposits that cannot be realised within 30 days,
    • shares in unquoted companies that are not connected with you,
    • unregulated collective investment schemes (UCISs).
  • This is the minimum age you usually must be before you can start to take money from your pension. It is set by the government and is currently 55 years old but will rise to 57 on the 6th April 2028. It isn’t the same as your pension retirement age, which is the age at which you choose to retire.
  • This is also known as a company pension, or workplace pension. It is a pension set up by employers to help employees save for their retirement. Both employee and employer contribute to the pension.
  • An offshore bond, or international bond, is simply a tax-efficient investment device that is issued by companies outside of UK jurisdiction. Offshore Bonds are a tax-efficient way for you to invest money over the medium to long-term (five years or more).
  • An OEIC, is a type of collective or pooled investment fund in the UK. Money from many investors is pooled together, and professional fund managers will buy securities such as stocks, bonds, and property according to an investment strategy.
  • This is the right for customers approaching retirement to shop around for several options to convert their pension pot or savings into a source of income, rather than simply taking the default option offered by their pension provider.
  • The Overseas Transfer Allowance (OTA) limits how much an individual can transfer overseas without incurring theOverseas Transfer Charge (OTC) of 25% on the excess. The OTA is equal to the individual’s LSDBA (Lump Sum Death Benefit Allowance).
  • An amount of cash set by law that you can take at retirement free of tax. It’s usually up to 25% of your pension fund and limited to a maximum of £268,275, (but it can be higher if certain protections are held).
  • A pension credit is the receipt of pension assets that is assigned to you following a pension sharing order from your ex-spouse or former civil partner.
  • The pension credit factor is the fraction of the standard lifetime allowance relating to a Pension credit.
  • The period in which pension contributions are made by you, or for you, to registered pension schemes and relieved non-UK pension schemes of which you are a member. From 2016 all pension input periods are aligned with the UK tax year (6th April to 5th April the following year) and cannot be changed.
  • This is a certificate provided by HMRC confirming the type and level of protection a member holds in relation to their pension schemes.
  • Pension recycling is when someone uses tax-free cash from a pension (when they take benefits) to then make a further pension contribution to receive tax relief. HMRC now limit the amount of tax relief a person can claim when tax-free cash is recycled into a pension.
  • Pension Sharing can come into effect with a divorce or the dissolution of a civil partnership. It provides a clean break between parties as the pension assets are split immediately and each party can decide what to do with their share independently. A court issues a pension sharing order stating how much of the pension the ex-spouse or ex-partner is entitled to receive.
  • A trust is a legal arrangement under which trustees hold the assets of the pension scheme in a trust fund for the benefit of the members of the scheme and their dependants, and for the main purpose of providing income in retirement.
  • A way of giving basic rate tax relief on contributions you make to your pension scheme.
  • This is an investment’s level of growth over time. This is often referred to as the investment's returns and is measured by the percentage change of the investment's value over time.

    • Annualised performance is the percentage movement (return) of an investment over a defined time period, calculated as an average per annum.
    • Cumulative performance is the total percentage movement in the price of the asset over the whole of any specified period, be it one/three/five years for example, or since an investment commenced.
  • These are the costs associated with running and maintaining a platform that handles all a customer’s instructions, payments, withdrawals etc.
  • This is a single bank account into which cash deposits for Account holders are received and held jointly as part of a ‘pool’.
  • This is a written document which grants someone the legal authority to act for another person in certain (or all) legal and financial matters.
  • The level of pension your fund could potentially sustain before you take your Pension Commencement Lump Sum (PCLS). After you have taken your PCLS, the value of your fund will reduce by the amount you have taken, and therefore the amount of pension your fund could potentially sustain also reduces.
  • A professional trustee is a person or company, who act as trustee of a pension scheme or trust. The person or company is not a beneficiary of the scheme, or is entitled to share any of the assets in the scheme.
  • This is where an individual is entitled to a retirement age lower than the normal minimum pension age for registered pension schemes (currently 55).
  • A Qualifying Recognised Overseas Pension Scheme is an overseas pension Scheme that meets certain requirements set by HMRC and can receive transfers of UK pension benefits without incurring an Unauthorised Payment and Scheme Sanction Charge. The purpose of QROPS, when introduced back in 2006, was to allow individuals moving overseas to be able to take their pension with them.
  • The act of transferring the ownership of an asset from one company to another in its current form without the need to convert the asset to cash. See also In Specie.
  • Real Time Information (RTI) is a system of PAYE reporting that started in April 2013. Under RTI, pension providers must send information to HMRC each time they pay their members any taxable income. This enables HMRC to keep more accurate records and to ensure that over time people pay the correct tax. As Embark Pensions makes one submission to HMRC each month in respect of any member income payments we have made, this means that all members must be paid on the same day so that the information is reported in real time.
  • The recognised overseas transfer factor is an enhancement given by HMRC when someone transfers funds from a recognised overseas pension scheme (ROPS) into a UK-based scheme, and can potentially increase their Lifetime Allowance.
  • A person who will give us, or their Financial Adviser, instructions or Trade Instructions with respect to the administration of the Embark JISA. This person must be accepted by us as being:

    • over the age of 18 and the parent or person with parental responsibility for the child,
    • a local authority if the child is in care, or
    • the child if the child meets the relevant requirements in the ISA Regulations.
  • A pension scheme that is registered by HMRC under Chapter 2 of Part 4 of the Finance Act 2004. Having a pension scheme registered means it can benefit from certain tax reliefs and exemptions.
  • Relevant UK earnings means any one or more of the following types of income:

    • employment income such as pay, wages, bonus, overtime, or commission and other P11D benefits.
    • income from self-employment or a partnership.
    • redundancy payment above the £30,000 tax exempt threshold.
    • income from a UK and/or EEA furnished holiday lettings business.

    • patent income, where the individual alone or jointly devised the invention.

    Note: Pension income, Capital Gains, rental income and investment income is not classed as earnings and cannot be included in the definition of relevant UK earnings.
  • This is an individual who, for a tax year:

    • has relevant UK earnings subject to income tax (see Relevant UK Earnings)
    • is resident in the UK at some time during that year
    • was resident in the UK both at some time during the previous five tax years and when the individual became a member of the pension scheme
    • has, or whose spouse or civil partner has, general earnings from overseas Crown employment subject to UK tax.
  • This is name given to a member of a non-UK pension scheme whereby, if at any time after 5 April 2006:

    • contributions paid by the member to the scheme have received migrant member relief, transitional corresponding relief, or relief under a double taxation arrangement or;
    • they are exempt from UK tax under section 307 of the Income Tax (Earnings and Pensions) Act 2003.
  • This is a scheme that can be treated as the equivalent of a registered pension scheme for the purposes of the Annual Allowance and the Lifetime Allowance, in relation to a member who has non-UK pension rights.
  • A residential property is classified as:

    • a building or structure that is used or suitable for use as a dwelling
    • any related land that is wholly or partly the garden for the building or structure
    • any related land that is wholly or partly grounds for the residential property, and which is used or intended for use for a purpose connected with the enjoyment of the building
    • any building or structure on any such related land
    • any building specified in regulations as residential property.
  • A Retail Client is a client who is not a professional client – a professional client being someone who has the experience, knowledge and expertise to make investment decisions and assess the risks of such investments.
  • Safeguarded benefits give you a level of secure pension income after you retire. That income may be calculated in several different ways but is usually based on either your final salary or your contributions. It may also be a promised rate in which you’d have an option to convert what you’ve accumulated so far into income at some future time (usually when the member turns a certain age).

    There are three types of safeguarded benefit:

    • Guaranteed Minimum Pension (GMP): This is a set minimum pension that’s guaranteed for men over 65 and women over 60. GMP benefits cannot be drawn early unless certain conditions are met. Pensioners with a GMP build up their pension rights through an employer’s pension scheme. It replaces a portion of the State Pension.
    • Guaranteed Annuity Rate (GAR): This offers defined benefits and a guaranteed minimum rate annuity when you retire.
    • Defined Benefit (Final Salary): Your benefit is calculated according to your length of service and the salary you've earned at the time you leave that employer or retire.
  • A savings-related scheme set up by your Employer under which you are given a right (known as a share option) to buy a certain number of shares at a fixed price at a particular time.
  • The person(s) responsible for the discharge of the functions of the pension scheme.
  • HMRC tax rules specify the rules that need to be met for payments to be authorised. Any payment that doesn’t meet these rules is classified as an unauthorised payment and therefore liable to a Scheme Sanction Charge.
  • This is when a client is authorised by us (or their financial adviser) to provide their own instructions through our online services with regard to their account.
  • This simply means the services provided by your Financial Adviser Firm, its Associates, your Discretionary Investment Manager or ourselves as the case may be.
  • An annuity is a retirement product you can choose to buy with all or part of your pension pot. You might choose a lifetime annuity, which pays you a regular income for the rest of your life, or a short-term annuity which lasts for a fixed number of years. A short-term annuity is also known as a fixed-term annuity. It will provide a regular amount of income for a certain time (usually no more than five years), but with the flexibility to change your mind later.
  • A Self-Invested Personal Pension (SIPP) is a pension 'wrapper' that allows you to save, invest and build up a pot of money tax free for when you retire. It also allows you to receive a tax-free lump sum from age 55  and withdraw an income (subject to your marginal rate of tax) in retirement, It iworks in a similar way to a standard personal pension.
  • Small, self-administered pension schemes (SSAS) are occupational schemes that are generally set up to allow a small number of senior staff in a company to accrue pension funds separate to other staff members. Membership is generally limited to a maximum of 11 members. These are often company directors or senior executives, however SSASes can be open to other staff members and even family members.
  • An individual or an institution that has significant financial market experience and knowledge capable of evaluating and understanding the merits and risks of a prospective investment.
  • An individual can place their pension lump sum death benefits into a discretionary trust, which will still allow their spouse to benefit after their death but these benefits won’t form part of their spouse’s estate on death.
  • Stakeholder pensions are a type of individual pension. Some employers offer them, but you can also start one yourself. Stakeholder pensions have low and flexible minimum contributions, capped charges and a default investment strategy – which can be helpful if you don’t want to make investment decisions.
  • An asset that can be realised within 30 days and includes any of the following:

    • bank account deposits
    • cash
    • cash funds
    • exchange traded commodities
    • government and local authority bonds and other fixed interest stocks
    • investment notes (structured products)
    • shares in investment trusts
    • managed pension funds
    • National Savings and Investment products
    • permanent interest-bearing shares (PIBs)
    • Physical gold bullion
    • real estate investment trusts (REITs)
    • securities admitted to trading on a regulated venue
    • units in regulated collective investment schemes
    • UK commercial property.
  • The statutory Lifetime Allowance that applies to a Benefit Crystallisation Event in a particular tax year unless you have a valid certificate or reference from HMRC for a higher Lifetime Allowance.
  • This is a regular payment form the government that most people can claim when they reach their pension age. In the UK, the amount a person receives depends on how many years of National Insurance contributions they have paid while they were working, as well as payments credited if/when they were unable to work.
  • An individual nominated by a beneficiary to receive their benefits in the event of their death. The scheme administrator may also nominate a successor but only where the beneficiary has not nominated an individual or a charity.
  • This is an investment strategy that involves setting an optimal long-term allocation of assets in a portfolio based on the investor’s objectives, risk tolerance, and time horizon.
  • This refers to an investment strategy that involves actively adjusting the allocation of investment assets (usually relative to Strategic Asset Allocation) based on short-term market conditions and expected market trends.
  • The acquisition of one company by another, either on a recommended (agreed) or hostile basis.
  • Property that can be moved including items such as plant and machinery or equipment and fixtures/fittings in buildings that are not normally part of the fabric of that building (e.g. solar panels, floor coverings, free-standing furniture, light shades and fittings, free standing gas and electric fires and kitchen white goods). It also includes cars, yachts, fine wines, jewellery etc.
  • If your total income in year is more than £260,000  your Annual Allowance will reduce by £1 for every £2 you earn over that amount. If you earn £200,000 or less, it won’t affect you at all.
  • The rules that apply to your use of our technology and/or services and that form an integral part of our online service and our Terms and Conditions.
  • This is a provider of an insured bond who has chosen to offer access to an Embark TPIA (Third Party Investment Account) within its own insured product.
  • An external provider that has chosen to offer access to an Embark TPIA (Third Party Investment Account) within their own product.
  • Provider of a Self Invested Personal Pension who has chosen to offer access to an Embark TPIA (Third Party Investment Account) within its own product.
  • This is the same as Adjusted Income however it excludes pension contributions.
  • This refers to an instruction received from you, your Financial Adviser or Discretionary Investment Manager to buy or sell investments relating to your account.
  • When an investor buys a Treasury Bill, they are effectively lending money to the government. They are financial concepts with a short term – rarely is the term longer than one year. Since treasury bills are directly backed by the government, they are very low-risk (and often low-return) investments. At the end of the term, investors receive their capital back plus interest. The interest rate is fixed in advance and does not change during the term.
  • The Undertakings for the Collective Investment in Transferable Securities (UCITS) is the European Commission's regulatory framework for managing and selling mutual funds. UCITS funds are authorised funds that can be sold in any country in the EU.
  • A payment by a registered pension scheme that is not permitted by rules contained in the Finance Act 2004. For example, the payment of a pension before minimum pension age would be considered an unauthorised payment unless the member is in ill-health.
  • Pension funds that have not yet been subject to a Benefit Crystallisation Event.
  • This is when you take your savings as a single lump sum or a series of lump sums. They are a single payment, or a series of single payments, made up of 25% tax free cash and 75% income (which is taxed at your marginal rate).
  • The Internal Revenue Service of the United States – the American equivalent of the UK’s HM Revenue and Customs.
  • When a property is sold with ‘vacant possession', this means it will be empty on the day the sale is completed. There will be no residents or tenants at the property, or any belongings (except where it has been agreed in the contract that certain belongings can/must be left).
  • The vesting date is the date where the trust, shares or options become available to the beneficiary, subject to the relevant conditions being met.
  • Volatility Managed Funds have an objective to manage their returns within predetermined volatility parameters and focus on ensuring risk levels are kept with in a predefined band or at a specific volatility outcome. Volatility is a type of risk and measures a Funds’ performance ups and downs. The higher the volatility, the larger the degree of uncertainty in the returns.
  • In a With-Profits pension fund, your money and that of other members is pooled and invested into a variety of assets such as shares, bonds, property and cash. However, the value of a With-Profits fund goes up smoothly and the value is guaranteed not to fall provided you cash in on the day you set at the start of the investment.