- A
- Allocation rate
- This is the percentage of a contribution which is invested after charges have been taken out. Usually seen in connection with a bond or investment portfolio.
- Annual Allowance
- The total amount you can pay in across all your pensions, per tax year, before a tax charge applies. The total amount includes the money you contribute yourself, tax relief on your contributions, and also any money contributed by your employer. The Annual Allowance reduces to £10,000 once you start to access your pension to take income withdrawals. This is known as the ‘Money Purchase Annual Allowance’ (MPAA). The MPAA does not apply if the only withdrawal you have made from your pension is tax free cash (PCLS). The Annual Allowance also reduces if you are a high earner. This is known as the ‘Tapered Annual Allowance’ (TPAA). The TPAA reduces your Annual Allowance by £1 for every £2 above a higher income threshold (£200,000 in the 2025/26 tax year). The most it can reduce to is £10,000.
- Annual Management Charge (or policy fee)
- The charge taken to cover costs within your pension plan. These charges can either be a flat charge or a percentage of your pension pot each year.
- Annuity
- This is a product which you can choose to purchase with your pension savings. Annuities pay a guaranteed income for the rest of your life, usually monthly, quarterly or annually. You can get different types of annuities, for example ones that build in spouse’s pensions, ones that increase each year in line with inflation, or ones that take account of any health conditions you might have. You can ‘shop around’ to purchase the most suitable annuity for your needs.
- Assets
- Investments held in your pension. Examples can include commercial property, cash deposits, company shares (equities), funds (unit trusts, investment trusts).
- Assignment
- This refers to the transfer of ownership (entitlement) to benefits held on a pension. The only circumstance where pension benefits can be transferred to someone else, is via a Pension Sharing Order following a divorce.
Is there jargon we use that you don’t fully understand? Please email us at info@ifglpensions.com and we will add the word to our Jargon Buster.