Professional who calculates risks and costs related to life assurance and investment policies.

On 6 April 2006 the Government implemented a new single tax regime for pensions. This was called A-Day.

There is no limit on the contributions that can be paid to a pension scheme. However, the annual allowance sets a limit in the tax year on the amount that can be contributed without incurring tax charges. For further details click onto: www.hmrc.gov.uk/manuals/rpsmmanual/rpsm06200010.htm

A type of contract where an agreed amount is paid yearly for life or an agreed shorter period. On taking benefits an annuity can be bought from us or any other authorised pension company.

Property with monetary value ie plant, machinery, shares, invoices, etc.

Also known as insurance but generally used for life assurance. Insurance covers an uncertain event whereas life assurance covers a certain event (ie death) only where the date is unknown.

Often used to mean a life assurance investment bond, which is a lump sum investment plan that provides an element of life cover, either guaranteed or unit-linked.

OR

A certificate of debt issued by governments or major companies. Bonds issued by the British Government are called Gilts.

A way of investing money in a wider range of investments than would be practicable for most individual investors, and to share the costs of doing so. Collective investment schemes are often referred to as investment funds and account for a substantial portion of all trading on major stock exchanges. Usually promoted with a wide range of investment aims, they often target specific geographic regions or sectors (e.g. Technology). Funds are often selected on the basis of the specified investment aims, their past investment performance and other factors such as fees.

A pension policy operated by an employer for its employees. Generally, the employer helps fund employee contributions. However, some company schemes exist only for administrative convenience.

Instead of building up entitlement to the State Second Pension (S2P), previously known as SERPS, an individual will instead transfer that pension liability to a private arrangement. For further information see: http://www.pensionsadvisoryservice.org.uk/pension_rights/contracting_out/

Also known as a ’premium’ and usually means payments into a pension scheme or into investment-based products.

A policy that pays out a capital sum in the event of a qualifying illness being diagnosed eg certain cancers. They can stand alone or be written as an ’add-on’ to a variety of other contracts eg whole of life.

A pension scheme where the rules state the benefits to be paid and the scheme is financed to meet these benefits. The most common of these are known as final salary pension schemes. The pension benefits are known in advance, but the cost is not. The benefits are normally expressed as a fraction (often called the accrual rate), of final salary for each year's membership of the scheme.

These are also called money purchase schemes, and the benefits are not known until they are taken. Contributions are paid to the pension scheme and invested in the chosen investment funds. The value of the fund when the member takes their benefits will be used to provide their pension benefits, usually by buying an annuity.

A medium to long-term life assurance linked savings contract that combines investment with protection. It builds up a cash value, generally on either a with-profit or unit-linked basis. The policy will pay out on surrender, maturity or death. The amount paid out is not guaranteed and could be less than the total amount invested.

An interest-only house purchase loan with an associated endowment policy. The aim is to pay the outstanding capital at the end of the term and provide life assurance for the value of the capital on death before maturity. However for most endowment policies the final sum and repayment is not guaranteed.

Another name for shares, or units of ownership in a company.

A financial adviser is a professional who gives investment advice and financial planning services to individuals and businesses. Ideally, the financial adviser helps the client maintain the desired balance of investment income, capital gains, and acceptable level of risk by using proper asset allocation. Financial advisers are regulated by the Financial Services Authority.

The Financial Ombudsman Service (FOS) is the official independent expert in settling complaints between consumers and businesses providing financial services. For more information about the FOS visit their website: http://www.financial-ombudsman.org.uk/

This is the government body that regulates all aspects of the financial services industry in the UK. For more information about the FSA and what they do visit their website at: http://www.fsa.gov.uk/Pages/about/index.shtml

The Financial Services Compensation Scheme (FSCS) is the UK's statutory fund of last resort for customers of authorised financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. For more information about the FSCS visit their website: http://www.fscs.org.uk/consumer/about_us/

The FTSE 100 is a share-index tracking the performance of the 100 most highly capitalised UK companies listed on the London Stock Exchange. The index began on 3 January 1984 with a base level of 1000. Today it is frequently reported as a measure of business prosperity.

The professional who runs an investment fund and decides what shares, bonds or gilts the fund should buy or sell.

Fixed rate or index-linked bonds issued and guaranteed by the UK Government.

Money received from wages (earned) or from investments (unearned).

Put simply, inflation is the general increase of prices and subsequent fall in purchasing power of money. The cycle of price inflation starts when production costs increase for the same level of production which results in an increase in the product price. This leads to a reduction of purchasing power which in turn, leads to higher wage demands, and therefore, higher production costs.

A contract in which the recipient of agreed payments agrees to compensate the payer in the event of certain events i.e. loss, damage, injury, death, etc.

The use of money to generate income and/or capital growth.

Tax efficient environment in which to hold savings. Introduced by the UK Government on 6 April 1999 to replace PEP and TESSA products. They enable savings to be held in the form of stocks and shares, cash, or any combination of the two subject to annual contribution limits.

Also known as a key features document. It is a document drawn up for all potential investors containing key information about a financial product to enable them to decide if they should proceed and what their rights are.

A general term to describe different types of personal protection policy, whose main purpose is to provide payment in the event of death.

An alternative phrase used to describe Life Assurance (see Assurance described above).

The lifetime allowance applies to pension schemes. It was introduced on A-Day and is a limit, set by the Treasury, on the value of benefits a member can take without incurring a tax charge.

The lifetime allowance amounts since A-Day are:

Tax year - Lifetime allowance

> 2006/2007 - £1.5 million

> 2007/2008 - £1.6 million

> 2008/2009 - £1.65 million

> 2009/2010 - £1.75 million

> 2010/2011 - £1.8 million

The Treasury will determine any future increases in the lifetime allowance, however they have confirmed that the 2010/2011 rates will apply for the following five years.

Any benefits in excess of the lifetime allowance will be subject to tax charges. These are:

55% if the excess benefits are taken as a lump sum, and/or 25% if the excess benefits are taken as income. Any income will also be taxed as earned income.

For further information about the lifetime allowance visit HM Revenue and Customs website at: http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM11200000.htm

Money laundering is the process by which criminals attempt to hide or disguise the true origin and ownership of the proceeds of their criminal activities. For further information see: www.fsa.gov.uk/pages/About/What/financial_crime/money_laundering/index.shtml

A mortgage is an agreement by which a loan is granted for the purchase of a property and the property itself is pledged as security. The loan is usually agreed for a fixed term, which is often 25 years, although most lenders will allow a shorter or longer period.

The person to whom an asset is mortgaged, ie the lender.

The person who mortgages the asset, ie the borrower.

This exists to measure the change of earnings in the UK. Generally the National Average Earnings Index increases more quickly than the Retail Prices Index (RPI). To find out the current rate of NAEI please visit http://www.incomesdata.co.uk/pay-employment-data/average-earnings.aspx

A limited investment company whose business it is to manage an investment fund. A stake is made in the fund by buying shares in the OEIC. As it is an open-ended fund, the fund gets bigger and more shares are created the more investors there are. Likewise, the fund reduces if investors sell their shares back to the company.

Anywhere outside the United Kingdom.

A lump sum whole of life assurance investment product from a company located outside of the UK. Offshore investment bonds tend to be located in areas where the local taxation is favourable, eg Ireland and the Isle of Man etc. This means there is little or no tax to pay on the investments held within the bond. However, UK residents may have tax to pay whenever they take benefits from the bond.

A policy that will pay out an income or a lump sum in the event of disability, dismemberment or death, caused by an accident. Personal Accident Insurance is not Life Assurance.

An annual income, usually associated with the period after retirement, but not necessarily so. A pension fund is a general term used to describe an investment fund built up during working life and used at retirement to purchase an annuity to provide a continuing income.

1. This is an entitlement for people aged 60 or over living in Great Britain. Pension Credit guarantees everyone aged 60 and over a minimum income. For further details see: www.thepensionservice.gov.uk/pensioncredit/home.asp

2. Following a divorce, or the dissolution of a civil partnership, the fund could be split between the former husband and wife, or between the forme registered civil partners. In such a situation one of the party's will receive a 'pension credit', which means a sum of money will be moved from one of the party's pension to the other party's pension.

A mortgage secured by repayment of the loan from the tax-free cash sum available from a pension scheme at retirement.

This has been set up to pay compensation to members of eligible defined benefit pension schemes when there is a qualifying insolvency event in relation to the employer, and where there are insufficient assets in the pension scheme to cover the Pension Protection Fund levels of compensation. For more information about the Pension Protection Fund please visit their website at: http://www.pensionprotectionfund.org.uk/index.htm

Although no longer available, these contracts allowed limited tax-efficient investments; which may be transferred to various different investment funds. All remaining PEP accounts became ISAs on 6 April 2008.

A policy which will provide an income in the event of a long-term absence from work because of illness or disability; income ceases upon return to work, retirement or death.

This insurance policy covers the cost of in-patient medical care.

Formal document produced by an insurance company which includes all contract details, i.e., sum assured or insured, premium and payment frequency, term of contract, etc.

Is where lots of people put different amounts of money into a fund which is then invested in one or more asset classes by a fund manager. These are sometimes called 'collective investments'

A pension policy available to anyone. It can be taken out by an individual, or by someone on the individual's behalf, for example a grandparent can take out a personal pension for their grandchild.

A regular payment of money into a policy to secure the contract.

Protected Rights are built up by money coming in from the Government for those who have in the past, or still are, “contracted out” of the State Second Pension, now commonly known as S2P, or before that the State Earnings Related Pension Scheme (SERPS). For further information see: http://www.thepensionservice.gov.uk/planningahead/options/additional-contracting-out.asp

Replacing an existing mortgage loan with another one.

A type of loan repayment that comprises of instalments made up of capital and interest.

A way of calculating inflation. It works by measuring the cost of a basket of everyday goods including the cost of housing and council tax charges. To find out the current RPI figure please visit: http://www.incomesdata.co.uk/pay-employment-data/default.aspx

The point in life where one has given up all paid work.

In terms of insurance, risk is the likelihood of a claim being made on a policy. In terms of investment, risk is a subjective view that comprises a balance of potential loss with potential gain.

A private pension scheme that allows the owner to manage their own investments.

A member may have to pay additional tax – a special annual allowance – if the total contributions they pay, or someone else pays on their behalf, to their pension schemes are more than £20,000 in the current tax year and their income is £150,000 or more in the current or either of the previous two tax years.

Stakeholder pensions are a low cost, and flexible way of saving, and the Government introduced them to encourage people to save for their retirement. For further information see: www.stakeholderpensions.gov.uk/

State Pension is paid in two parts.

Basic Pension, paid at a flat rate

Additional State Pension paid on the basis of your earnings before your retirement (see 'State Second Pension' below)

The Basic Pension is a flat rate benefit based on the number of years (known as qualifying years) in which you paid or were credited with a minimum amount of standard rate contributions. (Class1, 2 or 3 NI Contributions) Further information can be found at: www.thepensionservice.gov.uk/

From 6 April 2002, the State Second Pension replaced the State Earning Related Pension Scheme (SERPS). This pension provides a more generous additional state pension for low to middle earners as well as certain carers and those with a long-term illness. This pension is paid in addition to the basic State Pension and depends on your earnings during employment and National Insurance contributions you have paid.

A type of investment based on derivatives that are linked to the performance of an index or asset class for a fixed period. They often provide some form of protection so that you will get some or all of your money back provided they have been held for the full term.

A trust is an arrangement created by an individual (the settlor), who transfers the legal ownership of assets (such as a life insurance investment bond), to other individuals or a trust corporation (the trustees), for the benefit of certain individuals (the beneficiaries).

The settlor can be a trustee and in some situations could also be a beneficiary.

The trustees can be beneficiaries.

The beneficiaries can be named individuals, or an identifiable class of individuals (eg, all of my children whenever born).

The trustees must act in accordance with the terms of the trust and the law. They have clear legal responsibilities to manage the trust property on behalf of the beneficiaries.

An individual, group of people or independent institution responsible for the management of the trust and the legal owner of trust property, as defined by the trust deed.

Any policy in which the policyholder invests a premium that buys units in a fund. Performance is therefore linked directly to market conditions. This policy may be a life assurance, investment or savings policy.

The income from an investment, expressed as a percentage of its current market price.