Glossary of Terms

AER (Annual Equivalent Rate)

Interest paid from deposit, current or savings accounts.

AIFA (Association of Independent Financial Advisers)

Association of Independent Financial Advisers, industry trade body for financial advisers who are not tied agents.

APR (Annual Percentage Rate)

The percentage rate, taking account of charges over a year, you are charged on the outstanding balance when you borrow money or make a purchase on credit.

AVC’s (Additional Voluntary Contributions)

Extra payments you can make in addition to your main occupational pension scheme contributions to boost your retirement benefits. AVCs can be paid either to your employer’s scheme or to a separate arrangement. See also FSAVCs

CGT Capital Gains Tax

The tax payable on profit made on the sale of assets or property other than your home.

DIS Death in Service Benefits

The pension and lump sum paid to the deceased member’s spouse and/or other dependants where death occurs while still working for their employer, before their normal retirement date.

FSA The Financial Services Authority

The main regulatory body of the financial services industry.

FSAVC’s Free Standing Additional Voluntary Contributions

Extra payments you can make into an individual plan, which runs alongside your company pension scheme, to top up your pension fund. The plan is independent of your employer’s main pension scheme.

GPP Group Personal Pension

An arrangement made for employees of an employer to participate in a personal pension scheme on a group basis.

IFA Independent Financial Adviser

A professional financial expert who must by law give impartial “best advice” on financial companies, markets and products. IFAs are a type of financial advisers who are able to select from all the products available in the marketplace.

ISA Individual Savings Account

Tax-efficient savings plans which can hold cash or investments, or a combination of the two, which were introduced in 1999 to replace TESSAs and PEPs.

OPS Occupational Pension Scheme

A legal contract set up by an employer to provide pensions and/or other benefits for one or more employees on retirement, death or leaving pensionable service.

OEIC Open Ended Investment Company

Managed funds which hold a portfolio of investments.

OMO Open Market Option

Your right at retirement to buy an annuity from a provider other than the one who has administered your pension fund.

PAYE Pay As You Earn

Income tax and National Insurance contributions are collected from an individual’s salary, before it is paid to the individual, by their employer and passed to HM Revenue & Customs.

PHI Permanent Health Insurance

Insurance that pays a level of income in the event of long term sickness or disability.

PLC Public Limited Company

Any company with a share capital of at least a statutory minimum.

PMI Private Medical Insurance

Insurance which will pay for the cost of medical treatment in accordance with the relevant policy rules.

RPI Retail Price Index

The official measure of inflation calculated by weighting the costs of goods and services to approximate a typical family spending pattern.

SERPS State Earnings Related Pension Scheme

A state pension in addition to the basic state pension based on earnings. Replaced by the State Second Pension (S2P) on 6th April 2002.

SSAS Small Self Administered Scheme

Small Self Administered Scheme, an occupational scheme where the members are trustees and are directly responsible for administering the fund and paying out the benefits.