Pensions Glossary

A - D, E - H, I - L, M - P, Q - T, U - X, 

Accrued Benefits

Pension benefits for service up to a particular point in time for a pension scheme member.

Additional Voluntary Contributions (AVCs)

These are additional contributions voluntarily paid by a member of a company pension scheme in order to secure benefits over and above those set out in the rules of the scheme. AVC?s are only permitted if the rules of the particular pension scheme permit AVC?s to be made.

Annuity

The term ?annuity? means a series of payments made at stated intervals until a particular event (usually the death of the person receiving the annuity) occurs. It is normally secured by payment of a single premium to an insurance company.

Assets

Property, investments, cash and other items held by the trustees, in trust , for the beneficiaries i.e. the members of   the pension scheme.

AVC-PRSA (Additional Voluntary Contribution-Personal Retirement Savings Account)

If you are a member of an Occupational Pension Scheme and this scheme has no AVC facility, you may pay AVCs to a PRSA-AVC (see Personal Retirement Savings Account definition).

Benefits

Benefits are those payable to members in the event of death is service , usually lump sum and/ or dependants pensions and benefits which become payable to scheme members on reaching retirement age.

Contribution

This is the money paid into a pension scheme for a member and can be paid by an individual or an employer. Another name for contributions is pension premiums.

Contributory Scheme

A pension scheme which members are required to make contributions towards the cost of their benefits.

Defined Benefit Scheme

This is where your final pension is calculated in accordance with the formula set out in the pension scheme?s explanatory booklet and rules.  Your benefits will not be directly affected by investment returns. Your pension will usually be a proportion of your final annual earnings, multiplied by the number of years that you will have worked for the company before you retire.

Defined Contribution Scheme

Under this scheme, the amounts that you and your employer pay are invested, to build up a ?pension fund? for each member.  On retirement, the value of the accumulated investments including investment return will be used to provide retirement benefits.  So, the larger your ?pension fund?, the higher the benefits that you will receive.  You will be able to follow the build-up of your benefits ? because, once a year, you will receive a statement showing the value of your ?pension fund? ? and an estimate of the benefits that this is likely to provide.

Dependant

This is someone who is financially dependent on a member of a pension scheme or pensioner, or was so at the time of death or retirement of the member or pensioner.

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Executive Pension Plan

This is an individual pension scheme, set up by an employer for an individual director or employee. 

Financial Advisor

A financial advisor is someone who is regulated by the Central Bank of Ireland to give financial advice to individual members of the public.

Fund Manager

The person/firm who the Trustees or policyholder have appointed to manage the investment of the pension scheme?s/policy?s assets

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Investment

The investment of money, e.g. in a financial institution or by purchasing stocks or shares in a company, with the purpose of making a profit.

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Managed Fund

An investment contract which offers participation in a range of asset classes such as equities, cash and bonds within a single fund.

Market Value

This is the value of an asset if sold on the open market.

Member

A person who has been admitted to membership of a pension scheme and is entitled to benefits under the pension scheme.

Non-Contributory Pension Scheme

A pension scheme whose rules do not require any contribution from the members of the Pension Scheme.

Normal Pension Age

The Normal Pension Age is the earliest age that a person can retire and obtain their pension benefits.

Pension Scheme

This is a pension scheme set up and administered by an employer for its employees. It is usually set up by Declaration of Trust and Rules and is approvable by the Revenue Commissioners. It is also known as a Company Pension Scheme, Group Pension Plan and Superannuation Scheme.

Owner-Director Pensions

Another name for an Executive Pension Plan.   They can be Insured, Self Directed or Self Administered and the differences are principally in the range of investment options offered.

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Pension

This is the income that you will receive when you retire.

Pension Fund

This is the accumulated value of the assets in the pension scheme.

Pension Goal

Your pension goal is the amount you aim to provide for yourself by way of pension on retirement.

Pension Premiums

Contributions paid by a pension member or an employer to a pension scheme.

Pensions Board

The Pensions Board is a statutory body set up under the Pensions Act, 1990 (as amended). Its? regulatory role is to continue, improve and where necessary, introduce procedures to achieve compliance with regulatory requirements under various headings for occupational schemes and PRSA?s.

Personal Pension Plan

A Personal Pension Plan (such as a Retirement Annuity Contract) allows you to build up a private pension fund to help ensure a more secure and comfortable retirement.  A Personal Pension Plan is for people who are self-employed, sole traders or partners in a partnership, employees whose employer does not offer a pension scheme ? and workers who do not wish to join their employer?s scheme. 

Personal Retirement Savings Account (PRSA)

A PRSA is a flexible pension arrangement which enables people to provide themselves with retirement benefits in a highly effective way.

It is a contract between an individual and a PRSA provider in the form of an account that holds units in investment funds managed by approved ?PRSA providers?. 

A PRSA is a ?portable? arrangement ? so you can take it with you (whether you are working for others or for yourself) from job to job throughout your working life.

It is adaptable to your financial requirements ? so you can increase, reduce, suspend or stop your contributions at any time, without incurring any charge or penalty for doing so.

It is highly flexible ? so you will have a choice of ways in which to take your benefits at retirement.

To help you maximise your benefits, you are even allowed to continue paying contributions (up to the age of 75, if you wish), even after you have started to draw your benefits.

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Qualifying Period

Also known as the waiting period, this is the period of time an individual has to work for an employer before they can join the employer's pension scheme.

Retirement Annuity Contract

Pensions for the Self Employed (other than PRSAs) have become colloquially known as Personal Pensions. The correct legal name is Retirement Annuity Contract (RAC).

Self-employed Pensions

People who are self-employed are entitled to put a certain percentage of their profits into a pension (RAC & PRSA) plan and in doing so gain some tax benefits. See Personal Pension Plan

Statement of Benefits

This is sent to you by your pension provider every year.  It will usually tell you the current value of your plan, taking account of all the contributions that have been paid in ? and the investment performance that has been achieved.

Superannuation

A term sometimes used to describe an occupational pension scheme.

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Tax Benefits

There are 3 important tax benefits associated with having a pension plan:

You can claim income tax relief on your pension contributions, within certain limits

The money in your pension plan can grow tax-free;

When you retire, you will have the option to exchange part of your pension benefit for an immediate tax-free cash sum usually based on years of service

Waiting Period

Also knows as a qualifying period, this is the period an individual has to work for an employer before they can join the employer's pension scheme

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