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Quick Index :          A-C,          D-F,          G-M,          P-Z,          Common Abbreviations


Accrued Benefits

The benefits for service up to a particular point in time, whether vested rights or not. These benefits may be calculated in relation to current earnings or projected earnings and allowance might also be made for any increases provided for by the scheme rules or by legislation. Sometimes known as Accrued Rights.

Active Member

A member of a pension scheme who is in reckonable service- i.e.,currently in the employment to which the scheme relates, and who is included in the scheme for a pension benefit.

Actuarial Assumptions

In a defined benefit scheme the set of assumptions made by the actuary as to rates of return, inflation, increase in earnings, mortality, etc. which form the basis of an actuarial valuation or other actuarial calculation.

Actuarial Funding Certificate

A certificate required by the Funding Standard under the Pensions Act, stating that the scheme is capable of meeting specified liabilities in a statutory order of priority in the event of its being wound up on the date of the certificate.

Actuarial Reduction

A reduction made to the accrued benefits of a member to offset any extra cost arising from the payment of benefits before Normal Pension Age.

Actuarial Valuation

An investigation by the actuary into the ability of a pension scheme to meet its benefit promise. This is usually done to calculate the recommended contribution rate which takes account of the actuarial values of assets and liabilities of the fund. Such an investigation is also needed so that the actuary can complete a funding certificate. Actuary A professional adviser on financial matters involving the probabilities relating to mortality and other contingencies affecting pension scheme financing. The Pensions Act regulates who may function as actuary to a scheme. In the context of PRSAs, the Act also defines a PRSA Actuary, an actuary who must be employed or retained by a PRSA provider.

Added Years

In private sector schemes this means the provision of extra benefit by adding a period of pensionable service in a defined benefit scheme, arising from the payment into the scheme of a transfer value, the payment of additional voluntary contributions, or by way of augmentation. The term may have different meanings in the context of public sector schemes (see separate glossary).

Additional Voluntary Contributions (AVCs)

AVCs are extra contributions you pay in addition to the normal pension contributions you or your employer make (if you are a member of an employer pension plan). AVCs help to increase the value of your pension fund or can be used to contribute to a tax-free lump sum at retirement. If you are earning an income, you can claim tax relief on AVCs up to certain limits.

Administration fee

This is a fee you pay to a financial services firm for a service or product. All regulated firms have to give you details of administration and other fees before you buy a service or product.


A person regarded by the Revenue Commissioners as responsible for the management of a pension scheme.

Advisory service

A stockbroker will discuss your investment aims and objectives and then recommend a range of investments that they feel would best suit your needs. Most stockbrokers will charge a fee for their advisory services.

Allocation rate

This is the percentage of your money that is used to buy units in a pension or other type of investment fund. For example, an allocation rate of 97% means that for every €100 you invest, €97 is actually used to buy units. So in effect you pay €3 (or 3%) as a charge to the firm you invest with.

Alternative Arrangement

One of the available methods of choosing member trustees under the Pensions Act regulations. Under this method, members are asked to approve the employer's proposals for putting member trustees into place. If the members reject these proposals, an election under the Standard Arrangement takes place.

AMRF (Approved Minimum Retirement Fund)

An Approved Retirement Fund which is subject to restrictions on the drawdown of capital before age 75. Needed if an individual does not fulfil minimum income conditions.

Annual equivalent rate (AER)

AER shows you what the interest on a savings account would be if the interest was compounded and paid out to you each year (instead of monthly or over any other period). You may earn less than the AER because your money may not be invested for as long as a year. Sometimes firms use Compound Annual Rate (CAR) instead of AER on savings and investment products.

Annual Report

The Pensions Act requires the trustees of a pension scheme to communicate information about the scheme, its administration and its financial position on a regular basis. The content of the annual report is specified in the disclosure regulations. A shorter annual report may be issued for defined benefit schemes with fewer than 50 active members and for all defined contribution schemes.


An annuity is a contract with a life assurance company that will pay you a guaranteed, regular pension income for the rest of your life in return for you paying them a lump sum when you are ready to retire. The amount of pension income you get depends on the size of the lump sum, annuity rates at the time, your age, gender and state of health.

Approved Retirement Fund (ARF)

A fund managed by a qualifying fund manager in which a selfemployed person or a Proprietary Director can invest the proceeds of a retirement annuity or an occupational pension scheme on retirement. Non-pensionable employees who hold retirement annuity contracts also qualify.

Approved Scheme

An occupational pension scheme which is approved by the Revenue Commissioners under Chapter II Part I of the Finance Act 1972. See also Exempt Approved Scheme.


An individual or firm appointed to report on the accounts of a company or other entity (such as a pension scheme).


The improvement of benefits, either while still accruing or already in payment, typically where the cost of this provision is borne by the pension scheme itself and/or by the employer. Authorised Advisors Offer products from all financial services providers in the market. Other types of advisors include: multi-agency intermediaries and tied-agents.

Average Earnings Scheme

A scheme where the benefit accruing for each year of membership is related to pensionable earnings for that year. These schemes are not common.


Basis Point

One hundredth of one per cent (0.01%)


Target or measure against which performance will be judged – used to assess the performance of a fund or investment portfolio.


A person who is entitled to benefit,, or who will become entitled in specific circumstances (e.g. on the death of a member).

Benefit in Kind (B.I.K.)

Benefit given other than in cash which forms part of remuneration; if taxed under Schedule E, may be included for pension purposes.

Benefit Statement

A statement of the benefits payable in respect of an individual in certain circumstances, e.g., death, retirement, etc. Bid-offer spread This is an investment charge and refers to the difference between the buying and selling price of a unit in an investment or pension fund. A typical bid-offer spread would be 5%. For example, if you invest €100 in a pension or investment fund, its value would become €95 (€100 less 5%) if you withdrew the money immediately. The buying and selling price of the units in a fund depend on the value of the assets in the fund.


Certificate of debt issued by a company, a government or other institution. Bond holders are creditors of the issuer and interest is paid at the rate stated at the time of issue. The term “bond” is also used to describe a buyout policy. See Personal Retirement Bond

Book Reserve Scheme

Unfunded pension scheme which is accounted by a provision in the employer’s accounts. Common in some European countries. Breach of Trust Dealing with trust property by a trustee in a way which does not accord with the instrument creating the trust, or with the general law.

Bridging Pension

An additional pension paid between the date of retirement and some later date, when it will reduce or be discontinued. The most common type of bridging pension is paid in the interval between the date of retirement and the Social Welfare pension age, where Social Welfare benefits are taken into account in calculating the scheme pension, but members retire before these become payable.

Buy-Out Bond

The purchase by the trustees of a pension scheme of an insurance policy or bond in the name of a member or other beneficiary following termination of service, retirement, or on winding up of a scheme. The bond is bought in substitution of the member's rights under the pension scheme. Under the Pensions Act, purchase of such a bond on leaving service may be at the option of the member or, in certain circumstances, at the option of the trustees.


Capital gains

This refers to any profit you make if you sell an asset, such as shares, for a higher price than you originally paid. Capital Gains Tax (CGT) This is a government tax that you must pay if you make a profit (a capital gain) of more than €1,270 in any tax year if you sell an asset such as shares or investment property. Check the Revenue website for current rates. If you make a loss, you can subtract the amount of the loss from any amount that you owe in CGT.

Career Average Scheme

An alternative term for an Average Earnings Scheme

Cash Option

An alternative term for commutation.

Children's protection benefit

This is a benefit included on some life insurance policies. In this case when you take out life cover for yourself, your children are also covered up to a smaller specified amount.

Closed scheme

A pension scheme that does not accept new members.

Certificate of Existence

A document confirming that a person entitled to a pension is still alive.


This is a payment that a financial services company gives to a financial intermediary, such as a broker or financial advisor for selling their financial product.


An option given to a member to replace a series of future payments by an immediate lump sum. The exchange of pension for immediate cash is regulated by the Revenue Commissioners.

Commutation Factors

The mathematical factors used by the trustees to determine the amount of pension which needs to be given up in order to provide a given lump sum benefit.

Compound Annual Return (CAR)

CAR is a measure of the rate of return on a deposit or investment. You can use it to compare different accounts. If there is €110 in an account, a year after €100 was lodged in it the return, or CAR, is 10%. Your account may have certain terms and conditions that can stop you from getting the full rate, for example you can't make any withdrawals.

Compulsory Purchase Annuity (CPA)

An annuity that must be purchased on retirement for a member of an insured pension scheme or for the holder of a Personal Retirement Bond.

Contingent Benefit

Benefit whose payment depends on the happening of a particular event - specifically used in the context of the Family Law Acts to mean benefits payable from a pension scheme on the death of a member during the employment or self-employment to which the scheme relates.

Contingent Interest

A right or entitlement which depends on some event that is not certain to occur (e.g., the death of a scheme member).

Continuation Option

A facility offered by an insurance company that insures the death benefits under a scheme, whereby a member leaving the scheme can effect a life policy without evidence of health. Such options are now becoming less common.

Contribution Holiday

A term used to describe a period under which employers' and/or members' contributions are suspended. This usually happens when the fund is in surplus.

Contributory Scheme

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

Controlled Funding

A funding plan which has regard for the liabilities of a defined benefit scheme as a whole, rather than for those of individual members.

Corporate Trustee

A company which acts as a trustee.

Critical illness cover

This is an insurance that pays out a lump sum if you're diagnosed with a specified critical illness covered by your policy. Also referred to as a Serious Illness Policy.

Cross-Border Scheme

A scheme established in one EU Member State, which is authorised as to operate as a cross-border scheme and to accept members and contributions from another EU State. This term is used in the Pensions Act to describe a scheme established in Ireland. See also Overseas Pension Scheme.


The following article may be useful resource to assit you and your loved ones in developing your retirement plan and creating a secure and safe future for you and your family.

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Dictionary of Terms

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