Glossary

Pension words, made clearer.

Plain-English definitions with examples you can use in your pension records.

Definition & example

Defined contribution

A pension that builds an invested pot, with a value that can change.

Definition & example

Defined benefit

A pension that calculates retirement income using its scheme rules.

Definition & example

Pension administrator

The organisation handling the records and administration of a pension scheme.

Definition & example

Pension scheme

The pension arrangement whose rules and records apply to members.

Definition & example

Pension tracing

The process of reconnecting an employer or pension clue with the right scheme contact and member record.

Definition & example

Pension statement

A dated document describing information about your pension.

Definition & example

Workplace pension

A pension arranged through an employer; the arrangement may build an invested pot or benefits under scheme rules.

Definition & example

Personal pension

A pension arrangement usually building an invested pot, which may be arranged individually or used through an employer.

Definition & example

SIPP

A self-invested personal pension: a defined contribution arrangement with investment choices that depend on the provider.

Definition & example

State Pension

Government retirement income linked to National Insurance history and applicable rules, separate from private pension pots.

Definition & example

Employer contribution

A payment an employer makes towards a workplace pension, distinct from a deduction recorded from the worker’s pay.

Definition & example

Pensionable pay

The pay a scheme uses for its pension calculation; ask which earnings are included rather than assuming it is the whole payslip total.

Definition & example

Automatic enrolment

The process requiring employers to enrol eligible workers into a workplace pension, with eligibility and exceptions set by current rules.

Definition & example

Member reference

A reference a scheme uses to identify a member record; keep it with the relevant scheme rather than treating it as a value or entitlement.

Definition & example

Pension provider

The organisation named as provider for a pension arrangement; use the scheme paperwork to identify the right contact for your record.

Definition & example

Annuity

A way of using pension money to buy income, with the duration and features set by the contract.

Definition & example

Pension drawdown

A way of taking money from a defined contribution pension while the remaining pension stays invested.

Definition & example

Normal minimum pension age

The usual minimum age under pensions tax rules, distinct from an individual scheme’s normal benefit date.

Definition & example

State Pension age

The earliest age at which you can receive your State Pension, checked separately from private-pension dates.

Definition & example

Pension Wise

Free impartial guidance on the ways to take money from a UK defined contribution pension.

Definition & example

Annual allowance

The yearly pension-saving tax check across schemes, with an example and the records needed to understand your own position.

Definition & example

Carry forward

How unused annual allowance from earlier tax years may affect the pension-saving tax check, with conditions and a fictional example.

Definition & example

Money purchase annual allowance

The pension-saving tax check after certain kinds of flexible access, with trigger distinctions, a fictional record example and official guidance.

Definition & example

Salary sacrifice

How agreeing to lower cash pay can lead to an employer pension contribution, with a fictional record example and questions for payroll.

Definition & example

Pension tax-free cash

The tax-free part of certain pension lump sums, with allowance and payment-type distinctions, a fictional record example and official guidance.

Definition & example

Tapered annual allowance

The reduction in annual allowance for some high-income people, with two distinct income tests, a fictional record example and official guidance.

Definition & example

Net pay arrangement

A workplace pension method where member contributions are deducted before Income Tax is calculated. Understand the payslip labels, relief and low-earner payment distinction.

Definition & example

Relief at source

A pension contribution method where the provider claims relief from HMRC and adds it to the pension. Keep net payments, gross contributions and further relief distinct.